BEFORE  THE 

Interstate  Commerce  Commission 


Docket  No.  13494 


INVESTIGATION  OF  CLASS  RATES,  TO,  FROM  AND 
WITHIN  SOUTHERN  TERRITORY 


BRIEF  FOR 

NORTH  CAROLINA  CORPORATION  COMMISSION 


Edgar  E.  Clark,  W.  T.  Lee,  Chairman , 

Counsel.  George  P.  Pell, 

(Washington,  I).  C.)  A.  J .  Maxwell, 

C  ommission  ers. 


Raleigh,  N.  C.,  July  25,  1923 


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Class' 


FOR  USE  ONLY  IN 


THE  NORTH  CAROLINA  COLLECTION 


UNIVERSITY  OF  N.C.  AT  CHAPEL  HILL 


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49317265 


re 


INDEX 


PAGE 

Asheville  route .  26 

Buffalo-Pittsburg .  57 

Cannot  justify  higher  rates  to  Eastern  End,  Zone  1 .  18 

Charlotte,  N.  C .  69 

Central  Freight  Association  territory .  43 

Conclusion .  74 

Confirmed  by  Mr.  Plant’s  rebuttal  testimony .  31 

Comparison  of  specific  rates  and  mileages .  52 

Classification  differences .  60 

Differentials : 

Cincinnati  to  North  Carolina  points,  history  of .  11 

Buffalo-Pittsburg  to  North  Carolina  points .  13 

Eastern  Trunk-Line  territory  to  North  Carolina  points .  55 

Thirty  cents  from  C.  F.  A.  on  parity  with  60  cents  from  Eastern 

points . 55 

Johnson  City,  Tenn.,  case .  54 

Lower  differential  from  Pittsburg  demanded . *. .  67 

Earnings  of  carriers  (comparison)  : 

Chesapeake  and  Ohio,  Norfolk  and  Western,  Virginian,  South¬ 
ern,  Seaboard  Air  Line,  Atlantic  Coast  Line .  39 

Gross  and  net  revenue  on  main  line  of  Southern  Railway  in  North 

Carolina  greater  than  on  any  of  the  Virginia  trunk  lines .  36 

Operating  conditions  of  Southeastern  lines  within  North  Carolina....  30 

Preliminary . 3 

Proposals  made  to  meet  necessities  of  unreasonably  circuitous  routes  21 
Rates : 

Trunk  lines  through  Virginia  cities  rate-making  routes  to  North 

Carolina  points .  7 

Carriers  ignore  order  of  I.  C.  C.  in  rate  proposals .  9 

Increase  by  carriers  in  January,  1922 .  14 

Carriers’  rate  proposals  on  basis  to  keep  open  circuitous  routes  67 

Higher  than  combination .  48 

Rates  to  Virginia  cities  higher  than  Disque  A  scale .  62 

Revenue,  operating,  of  carriers  : 

Atlantic  Coast  Line .  32 

Southern  Railway .  33 

Seaboard  Air  Line . 34 

Chesapeake  and  Ohio,  Norfolk  and  Western,  Virginian .  38 

Zones  Two  and  Three .  69 


Digitized  by  the  Internet  Archive 
in  2019  with  funding  from 
University  of  North  Carolina  at  Chapel  Hill 


https://archive.org/details/beforeinterstateOOnort 


BEFORE  THE 


Interstate  Commerce  Commission 

Docket  No.  13494 


INVESTIGATION  OF  CLASS  RATES,  TO,  FROM  AND 
WITHIN  SOUTHERN  TERRITORY 


BRIEF  OF  THE 


NORTH  CAROLINA 


CORPORATION  COMMISSION 


There  will  be  discussed  in  this  brief  the  adjustment  of  rates 
between  Ohio  River  points,  Central  Freight  Association  terri¬ 
tory  and  Buffalo-Pittsburg  groups,  on  the  one  hand,  and 
points  in  the  State  of  North  Carolina,  on  the  other. 

Rates  between  points  east  of  Buffalo-Pittsburg  groups  and 
points  in  North  Carolina  are  not  involved  in  the  investigation, 
having  been  recently  revised  under  order  of  the  Commission 
in  Dockets  10500-10515. 

Rates  between  points  in  North  Carolina  and  the  Southeast 
and  Mississippi  Valley  are  included  in  the  investigation.  These 
rates  have  likewise  been  recently  revised  under  order  of  the 
Commission  in  Dockets  10500-10515. 

It  is  not  our  purpose  to  discuss  this  adjustment  further  than 
to  express  the  opinion  that  it  will  be  more  satisfactory  to  all 
interests  to  preserve  the  general  system  of  grouping,  rather 
than  to  adopt  a  complete  system  of  mileage  scale  rates. 

Whether  such  revised  rates,  upon  a  general  scheme  of  group¬ 
ing,  are  retained,  or  whether  there  should  be  substituted  for 
them  rates  based  upon  a  mileage  scale,  the  interest  represented 
in  the  original  complaint  in  Docket  10500  will  be  served,  to  wit, 
rates  will  reflect  a  differential  under  the  rates  of  the  Virginia 
cities  related  to  the  shorter  mileage  between  the  points  in 
North  Carolina  and  the  Southeast. 


4 


We,  of  course,  have  an  important  interest  in  the  measure  of 
rates,  and  believe  that  the  rates  proposed  by  the  carriers  are 
too  high,  but  we  seek  no  special  advantage,  and  have  not  given 
the  thought  and  research  to  this  phase  of  the  investigation  that 
would  permit  us  to  offer  suggestions  of  value,  or  in  which  we 
could  have  complete  confidence.  This  question  will  be  ex¬ 
haustively  treated  by  other  parties. 

The  features  of  the  investigation  that  are  of  paramount  im- 

% 

portance  to  the  commerce  and  industries  of  North  Carolina  are 
the  adjustments  proposed  by  the  carriers  between  Ohio  River 
cities,  Central  Freight  Association  and  Buffalo-Pittsburg  ter¬ 
ritories  and  points  in  North  Carolina. 

The  rates  proposed  by  the  carriers  between  all  these  groups 
and  the  zones  in  North  Carolina  are  so  far  out  of  line  with 
any  reasonable  basis  for  such  rates  that  their  proposal  by  the 
carriers  can  only  be  understood  on  the  theory  that  the  whole 
readjustment  with  which  they  were  dealing  was  so  large,  and 
their  attention  so  absorbed  with  the  larger  adjustments  to  the 
whole  Southeast,  that  adequate  consideration  was  not  given  the 
peculiar  features  of  the  North  Carolina  adjustment;  to  the 
different  routes  over  which  they  have  been  and  must  continue 
to  be  made ;  to  the  different  rate  levels  applying  over  these 
routes,  and  to  the  totally  different  transportation  and  com¬ 
mercial  conditions. 

Indeed,  this  view  of  the  matter  is  confirmed  by  carrier  testi¬ 
mony.  By  reference  to  letter  of  carrier  executives  (Womble, 
Exhibit  No.  1168),  and  also  testimony  of  carrier  witness,  B.  G. 

Brown  (page _ ),  it  will  be  seen  that  the  carriers  took  the 

rate  of  $1.75  from  Macon,  Ga.,  to  Cincinnati,  and  made  that 
the  basis  of  their  proposed  rates  for  equal  mileage  from  Cin¬ 
cinnati  to  Winston-Salem  and  the  western  half  of  zone  one,  in 
North  Carolina,  and  the  rate  of  $1.87,  Augusta,  Ga.,  to  Cin¬ 
cinnati,  and  made  that  the  basis  for  the  proposed  rate  for  equal 
mileage  to  Raleigh  and  the  eastern  end  of  zone  one  in  North 
Carolina. 

This  basis  takes  no  account  of  the  fact  that  Macon  and 
Augusta  are  in  the  heart  of  the  Southeast,  and  that  everv  mile 
of  the  haul  from  Cincinnati  to  these  destinations  is  over  South- 


eastern  lines,  while  zone  one  in  North  Carolina  borders  for  two 
hundred  and  fifty  miles  alongside  of  official  classification  trunk 
lines,  with  86.6  per  cent  of  the  haul  from  Cincinnati  to  these 
destinations  in  North  Carolina  over  these  trunk  lines,  and  that 
these  North  Carolina  cities,  having  the  benefit  of  trunk-line 
haulage,  have  to  meet  trunk-line  competition  of  their  Virginia 
competitors  within  their  own  territory. 

In  other  words,  under  the  carriers’  proposals,  these  zone-one 
points  in  North  Carolina,  having  trunk-line  facilities  within  an 
average  of  eighty-five  miles  of  their  doors,  receiving  their 
freight  over  these  trunk  lines,  and  having  to  meet  trunk-line 
competition,  would  have  to  pay  the  full  Southeastern  level  of 
rate,  not  only  for  their  eighty-five  miles  of  haul  over  rail  lines 
having  the  greatest  density  of  traffic  of  any  lines  in  the  South¬ 
east,  but  also  the  full  level  of  Southeastern  rates  for  the  86.6 
per  cent  of  their  haul  over  the  lower-rated  lines  in  trunk-line 
territory. 

Comparing  specifically  Macon  and  Winston-Salem,  the  short¬ 
line  mileage,  Cincinnati  to  Macon,  is  constructed  over  three 
lines  of  road,  and  all  of  it  Southeastern  mileage.  Cincinnati  to 
Winston-Salem  is  over  the  single  line  of  the  Norfolk  and 
Western  and'  428  miles  of  the  total  of  550  miles  is  over  the 
trunk  line  of  the  Norfolk  and  Western. 

Comparing  Macon,  Georgia,  with  Greensboro,  North  Caro¬ 
lina,  the  next  largest  city  in  the  western  division  of  zone  one, 
480  miles  would  be  over  trunk  line  of  the  Norfolk  and  Western 
and  114  miles  over  the  main  line  of  the  Southern.  The  poorest 
section  of  road  over  which  freight  would  travel  Cincinnati  to 
Greensboro,  through  Lynchburg,  would  be  the  trunk  line  of  the 
Norfolk  and  Western.  The  section  of  the  Southern  Railway, 
reaching  from  Greensboro  to  Lynchburg,  has  greater  density 
of  traffic  than  even  the  trunk  line  of  the  Norfolk  and  Western. 
(See  Plant  Exhibit  No.  1917,  showing  traffic  density  on  this 
section  of  the  Southern  Railway,  $66,676  per  mile,  or  greater 
than  any  section  of  road  in  the  whole  South.) 

The  imperative  necessities  of  commercial  competition  have 
at  all  times  been  persuasive  with  the  Commission  and  influen¬ 
tial  with  the  carriers,  and  until  such  time  as  rates  for  the  whole 


6 


country  can  be  made  on  a  single  blanket,  the  necessities  of 
commercial  competition  must  continue  to  have  their  influence. 
In  what  other  way  can  there  be  adjustments  in  border  terri¬ 
tories  that  will  permit  fair  competition  in  commerce  and  in¬ 
dustry  ? 

If  commerce  and  industry  in  this  border  territory — blank- 
eted  with  trunk  line  rates  for  two  hundred  and  fifty  miles 
along  its  northern  border — did  not  have  to  live  or  die  in  this 
fierce  competition  of  next-door  neighbors — if  commercial  com¬ 
petition  could  be  entirely  eliminated  from  the  equation — there 
is  no  sound  economic  basis  on  which  the  same  level  of  rates 
could  be  justified  from  Cincinnati  to  'Winston-Salem  and 
Greensboro  as  from  Cincinnati  to  Macon,  Georgia.  When  the 
same  level  of  rates  can  be  logically  applied  through  trunk  line 
territory  to  Winston-Salem  and  Greensboro  as  from  Cincinnati, 
through  southeastern  territory  to  Macon,  Georgia,  there  will 
be  no  justification  left  for  differentiation  in  rates  in  territorial 
groups,  and  we  will  have  one  level  of  rates  from  the  Atlantic 
to  the  Pacific  and  from  the  Lakes  to  the  Gulf.  The  variation 
in  conditions  involved  here  is  as  great  as  will  be  found  to  exist 
between  any  two  general  classification  and  rate  territories. 

The  short  line  route  from  Cincinnati  to  every  city  and  town 
in  North  Carolina  zone  one,  without  exception,  is  the  trunk 
line  route  through  Virginia  gateways.  (Womble  Exhibit,  No. 
1205.)  This  is  also  admitted  by  B.  G.  Brown,  chairman  of  the 
committee  representing  the  Carolina  lines,  on  cross-examina¬ 
tion  (p.  4829) : 

“Q.  Well,  it  is  true,  Mr.  Brown,  isn’t  it,  that  the  short  line 
route  from  Cincinnati  to  zone  one  stations  in  North  Carolina — 
if  there  are  any  exceptions  to  this  you  can  state  it — is  through 
the  Virginia  cities  routes? 

“A.  Yes,  sir,  that  is  largely  true.  If  there  are  any  excep¬ 
tions  I  do  not  recall  them,  as  to  Cincinnati.” 

The  most  direct  route  over  southeastern  lines  is  that  of  the 
Southern  Railway  through  Asheville.  That  route  is  circuitous 
to  every  city  and  town  in  zone  one,  and  the  average  circuity 
is  RS1/)  miles.  (Womble  Exhibit,  No.  1205.)  This  exhibit  shows 


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the  average  distance  via  the  trunk  lines  to  be  633  miles,  and 
via  the  Southern’s  Asheville  line  719%  miles. 

That  the  trunk  line  routes  through  Virginia  cities  are,  and 
always  have  been,  the  rate-making  routes  from  Cincinnati  to 
North  Carolina  zone  one  has  not  only  been  admitted  by  the 
carriers  from  time  immemorial — they  have  asserted  it,  pro¬ 
claimed  it,  and  emphasized  it  on  every  previous  occasion  when 
this  rate  adjustment  has  been  in  issue.  This  position  has  been 
so  often  presented  and  argued  and  stressed  before  the  Com¬ 
mission  bv  the  Carolina  lines  that  we  could  fill  a  book  with 
«/ 

quotations  in  point  from  the  records  which  they  have  placed 
before  the  Commission  in  former  rate  proceedings.  One  gen¬ 
eral  quotation,  to  which  all  the  Carolina  lines  were  parties,  will 
serve  here : 

“It  should  always  be  borne  in  mind,  however,  that  the  trunk¬ 
line  adjustments  applied  by  the  Norfolk  and  Western  and  the 
Chesapeake  and  Ohio  and  their  connections  from  Cincinnati 
and  Louisville  and  the  whole  of  Central  Freight  Association 
territory  to  Virginia  cities  absolutely  controls  the  adjustment 
of  through  rates  to  all  of  the  destinations  here  involved, 
whether  in  Virginia  or  in  North  Carolina,  with  the  exception 
of  that  portion  of  the  State  of  North  Carolina  lying  west  of 
Statesville  and  Gastonia.  Even  beyond  the  points  last  men¬ 
tioned  the  Virginia  cities  rates  make  the  rates  on  some  of  the 
classes  as  far  west  as  Asheville.”  (P.  16.) 

“While  the  Carolina  lines  have  absolutely  no  control  over 
the  adjustment  of  rates  from  the  west  to  Virginia  cities,  this 
adjustment  of  rates,  owing  to  the  extremely  low  level  of  rates 
or  proportions  of  rates  accepted  by  the  trunk  lines  from  the 
Ohio  River  and  points  in  Central  Freight  Association  territory 
to  the  Virginia  cities,  exercise  an  absolutely  controlling  and 
dominating  influence  upon  rates  to  the  destination  territory 
here  under  consideration. 

“Dating  from  the  earliest  stable  adjustment,  the  rates  from 
all  territory  north  of  the  Potomac  River  and  on  and  north  of 
the  Ohio  River  to  points  in  Carolina  territory  have  been  made, 
and  logically  so,  by  the  routes  through  Virginia  cities,  because 
the  measure  of  these  rates  has  been  and  is  controlled  by  the 
abnormally  low  rates  applying  to  the  Virginia  cities.  This  is 
true  with  respect  to  rates  from  the  Ohio  River  crossings,  points 
in  Central  Freight  Association,  Trunk  Line  and  Buffalo-Pitts- 
burg  territories,  and  was  an  established  fact  many  years  before 


8 


the  Southern  Railway  was  organized,  and  before  there  was  any 
practical  route  via  Asheville”  (pp.  49-50 — Womble  Exhibit, 
No.  1172,  quoting  from  brief  of  Carolina  lines,  filed  February 
1,  1916). 

Further  indicating  that  the  proposed  adjustment  Cincinnati 
to  North  Carolina  received  no  consideration  from  the  carriers 
other  than  a  blind  application  of  the  southeastern  yardstick 
over  the  route  of  the  Virginia  trunk  lines  as  the  direct  short 
line,  the  carrier  witness,  Mr.  B.  G.  Brown,  chairman  of  the 
Carriers’  Carolina  Committee,  admitted  his  complete  surprise 
when  confronted  with  the  fact  that  his  proposed  rates  were 
substantially  in  excess  of  the  full  combinations  of  local  rates 
on  Virginia  gateways  (p.  4830)  : 

“Q.  In  proposing  this  adjustment,  Mr.  Brown,  did  you  give 
any  consideration  to  the  alternative  mileage  scale  which  was 
put  into  effect  in  January  applicable  between  Virginia  and 
North  Carolina  cities,  and  to  the  situation  that  the  rates  you 
propose  to  the  territory  I  have  been  discussing  are  substanti¬ 
ally  in  excess  of  the  full  combinations  on  Virginia  cities  em¬ 
ploying  the  use  of  tfiat  mileage  scale? 

“A.  No,  sir;  I  am  frank  to  say  that  we  did  not,  and  if  there 
are  any  such  cases,  of  course  we  must  revise  the  figures.” 

Would  the  whole  history  of  rate  investigation  before  the 
Commission  disclose  a  like  precedent,  where  carriers  had  after 
months  of  investigation  proposed  a  rate  revision  that  exceeded 
the  full  combinations  of  local  rates  on  a  competing  point,  in 
some  instances  as  much  as  thirty-one  cents  on  fourth  class? 
It  can  mean  nothing  else  than  that  the  carriers  blindly  applied 
a  southeastern  yardstick  to  the  extremes  of  border  territory, 
on  rates  properly  making  through  trunk-line  territory,  and 
without  giving  any  consideration  to  the  differences  in  commer¬ 
cial  and  transportation  conditions  in  the  border  territory,  or 
without  giving  any  consideration  whatever  to  the  level  of  rates 
that  should  apply  on  the  mileage  through  trunk  line,  as  against 
southeastern  territory,  and  also,  as  frankly  admitted  by  Mr. 
Brown,  without  giving  any  consideration  to  the  stipulation  by 
the  Commission  in  its  order  for  this  general  investigation  that 
such  rates  should  be  revised,  “having  regard  to  the  relation- 


9 


ship  which  rates  between  Ohio  River  crossings  and  points  in 
North  Carolina  should  bear  to  rates  between  Ohio  River  cross¬ 
ings  and  Richmond,  Norfolk,  Lynchburg,  Roanoke,  and  other 
points  in  Virginia  known  as  Virginia  cities.” 

Hear  Mr.  Brown  on  cross-examination  (pp.  4846-7)  : 

“Q.  Do  I  understand  you  to  say,  Mr.  Brown,  that  you  made 
these  rates  without  any  relation  to  the  Virginia  cities? 

“A.  Yes,  sir;  from  the  Ohio  River. 

“Q.  You  gave  no  consideration  whatever  to  the  order  of 
the  Commission  for  this  investigation  in  specific  terms  that 
your  rates  from  Cincinnati  and  Louisville  to  North  Carolina 
points  should  be  revised  with  relation  to  your  rates  from  Cin¬ 
cinnati  and  Louisville  to  the  Virginia  cities? 

“A.  Yes,  sir;  we  gave  consideration  to  that  provision  in 
the  order  setting  down  this  investigation,  and  after  giving  it 
consideration  concluded  that  the  rates  to  the  Carolinas  should 
not  be  made  with  any  relation  to  the  Virginia  cities,  and  there¬ 
fore  have  not  proposed  any  such  basis.” 

Again,  on  page  4872,  Mr.  Brown  says: 

“I  want  to  state  once  more  that  the  proposed  rates  from 
Cincinnati  and  Louisville  are  not  made  with  any  relationship 
whatever  to  the  rates  to  the  Virginia  cities.” 

That  is  indeed  a  startling  admission  from  the  carriers.  If 
the  Commission  had  not  imposed  that  direction  upon  the  car¬ 
riers  the  obligation  would  necessarily  have  rested  upon  them 
to  make  their  rates  to  North  Carolina  with  relation  to  the 
routes  and  the  gateways  over  and  through  which  the  direct 
short  lines  run,  and  with  relation  to  the  rates  made  over  those 
lines  to  the  gateways.  The  inherent  facts  of  the  situation  im¬ 
posed  that  obligation  upon  them,  even  without  any  order  or 
direction  from  the  Commission.  No  other  method  of  construct¬ 
ing  these  rates  can  be  defended.  And  vet  we  have  the  frank 
admission  of  the  chairman  of  the  Carriers’  Committee  in  charge 
of  the  revision  of  the  rates  to  Carolina  territory  that  they  were 
advertent  to  this  direction  from  the  Commission,  gave  it  con¬ 
sideration,  and  then  concluded  that  “the  rates  to  the  Carolinas 
should  not  be  made  with  any  relation  to  the  Virginia  cities,  and 
therefore  have  not  proposed  any  such  basis.” 


10 


Having  proposed  rates  in  complete  disregard  of  rates  to 
competing  cities  through  which  the  rates  make,  and  of  the  rate 
level  on  the  lines  over  which  the  rates  make,  and  by  the  appli¬ 
cation  over  these  routes  of  the  proposed  southeastern  measure 
of  rates,  and  confronted  by  the  fact  that  rates  made  in  this 
manner  substantiallv  exceed  the  full  combination  of  local  rates, 
it  is  interesting  to  see  how  the  carriers  have  proposed  to 
remedy  this  little  defect  that  had  previously  escaped  their 
notice.  As  previously  quoted,  when  Mr.  Brown  was  asked  if 
he  had  given  consideration  to  the  fact  that  his  proposed  rates 
exceeded  full  combinations  of  local  rates,  he  replied : 

“A.  No,  sir;  I  am  frank  to  say  that  we  did  not,  and  if  there 
are  any  such  cases,  we  must  revise  the  figures.’ ’ 

In  revising  their  figures  the  carriers  have  employed  the 
philosophy  of  the  parent  who  was  interrupted  in  his  admin¬ 
istration  of  corrective  measures  to  his  son,  with  the  admoni¬ 
tion  that  the  severity  of  the  punishment  was  about  to  £ 4 split 
his  Sunday  pants.” 

“Very  well,”  says  parent,  “just  take  them  off.” 

The  carriers  propose  to  remedy  their  blundering  proposal 
by  the  simple  process  of  again  lifting  the  local  rates,  which 
are  not  involved  in  this  investigation,  and  which  had  already 
been  arbitrarily  advanced  bv  them  in  Januarv,  1922,  so  as  to 
adjust  the  combination  to  their  proposed  rates  and  so  as  more 
effectively  to  shut  out  the  influence  of  the  Virginia  cities 
trunk-line  route,  and  then,  after  rebuilding  their  wall  to  shut 
out  from  this  border  territory  any  influence  whatever  from 
the  trunk-line  routes,  to  employ  an  alternative  rule  in  their 
tariffs,  graciously  conceding  that  the  rebuilt  combination  of 
full  local  rates  shall  not  be  exceeded  as  a  through  rate. 

It  will  be  interesting  to  set  down  here,  in  chronological  order, 

the  series  of  events  which  led  to  the  present  adjustment  of 

Ohio  River  rates  to  North  Carolina,  and  the  series  of  changes 

which  the  carriers  have  made  and  are  now  proposing  to  make 

« 

to  complete  their  process  of  making  their  rates  to  this  border 
territory,  over  the  trunk  lines,  on  the  southeastern  basis. 


11 


When  the  trunk-line  basis  of  rates  was  put  in  effect  to  Nor¬ 
folk,  about  1886,  the  Cincinnati-Norfolk  lines  had  to  take 
Chicago  traffic  at  Cincinnati  on  a  32  cents  basis.  The  trunk¬ 
line  rate  from  Chicago  to  Norfolk  was  72  cents,  the  Chicago 
to  Cincinnati  rate  40  cents,  leaving  the  Cincinnati-Norfolk 
lines  32  cents.  Finding  themselves  handling  traffic  from 
Chicago  to  Virginia  cities  on  the  32  cents  basis,  the  Cincinnati- 
Virginia  cities  lines  put  into  effect  the  32  cents  scale  as  pro¬ 
portional  rates  Cincinnati  to  Virginia  cities  on  traffic  for  Caro¬ 
lina  territory. 

For  all  the  years  up  to  the  percentage  advances  of  the  war 
period  this  32-cent  scale  remained  in  effect,  at  times  as  a  pub¬ 
lished  proportional  rate,  and  at  times  as  a  basis  of  division. 

The  Carolina  lines  during  all  this  period,  up  to  1914,  de¬ 
manded  and  received  their  full  local  rates  from  the  Virginia 
gateways  on  western  traffic,  their  local  rates  to  the  zone  near¬ 
est  the  gateways  being  61  cents. 

It  was  never  satisfactory  to  the  North  Carolina  shippers  to 
pay  the  Carolina  lines  their  full  local  rate  of  61  cents  to  handle 
through  traffic  for  an  average  distance  from  the  nearest  Vir¬ 
ginia  city  of  104  miles,  while  the  trunk  lines  hauled  it  an 
average  distance  to  the  gateways  of  548  miles  for  32  cents. 

This  unsatisfactory  situation  was  responsible  for  many  rate 
controversies  with  the  carriers,  and  before  the  Commission. 

The  first  case  was  that  of  the  Charlotte  Shippers’  Associa¬ 
tion  v.  Southern  Railway  Company,  11  I.  C.  C.,  p.  108,  in  which 
the  Commission  made  the  following  finding: 

“In  the  present  case  the  remedy  rests  alone  with  a  modi¬ 
fication  of  the  system  of  charges  to  the  territory  in  question, 
and  the  principal  cause  of  complaint  may  be  removed  by  an 
agreement  of  the  connecting  carriers  to  through  rates  to  ter¬ 
minal  points  something  less  than  the  addition  of  the  Lynchburg 
proper  rates,  and  the  Commission  recommends  such  action  to 
the  consideration  of  the  roads.  We  have  no  authority  to  enter 
an  order  commanding  such  agreement,  but  in  consonance  with 
the  practice  over  so  large  a  portion  of  the  country,  and  con¬ 
trolling  so  great  a  percentage  of  the  traffic,  any  other  method 
must  remain  a  constant  source  of  irritation  and  complaint,  be 
considered  an  injustice  by  the  shippers,  and  their  discontent 
an  embarrassment  to  the  roads.” 


12 


In  Corporation  Commission  of  the  State  of  North  Carolina 
v.  Norfolk  and  Western  Railway  et  al.,  19  I.  C.  C.,  p.  303,  the 
Commission  found  the  61  cents  rate  from  Roanoke  to  Winston- 
Salem  and  from  Lynchburg  to  Durham  to  be  an  unreasonable 
rate,  and  ordered  it  reduced  to  52  cents  as  a  local  rate,  and 
with  the  knowledge  that  this  would  also  reduce  to*  the  same 
extent  the  through  rates  from  the  west. 

In  1913  the  carriers  agreed  with  the  Corporation  Commis¬ 
sion  of  North  Carolina  to  put  into  effect  proportional  rates, 
to  apply  from  Virginia  cities  to  all  points  in  zone  one,  North 
Carolina,  in  connection  with  the  32  cents  trunk-line  propor¬ 
tional  Cincinnati  to  Virginia  cities,  and  the  proportional  south 
of  the  gateways  to  all  points  in  zone  one  was  made  50  cents 
in  lieu  of  the  61  cents  local  rate.  This  proportional,  under 
percentage  changes,  became  78  cents,  now  70  cents. 

This  adjustment  was  approved  by  the  Commission  upon 
application  of  the  carriers  in  re  “  Rates  to  North  Carolina 
Points,”  29  I.  C.  C.,  p.  550.  The  following  quotation  is  from 
opinion  of  the  Commission  in  that  case : 

“In  Charlotte  Shippers7  Association  v.  S.  Ry.  Co.,  11  I.  C. 
C.,  108,  the  Commission  had  occasion  to  examine  the  rates 
from  western  points  to  Charlotte  and  other  points  in  North 
Carolina.  We  then  found  the  low  rates  to  the  Virginia  cities 
and  the  relatively  high  rates  to  points  in  North  Carolina  to 
be  a  source  of  irritation  and  complaint,  and  the  view  was  ex¬ 
pressed  that  such  rates  would  always  be  regarded  by  the  ship¬ 
pers  as  an  injustice,  and  that  their  discontent  would  prove  an 
embarrassment  to  the  roads. 

“The  Commission  recommended  that  the  carriers  consider 
the  establishment  of  rates  which  should  be  produced  by  the 
addition  to  the  proportional  rates  to  the  Virginia  cities  of 
something  less  than  the  full  locals  from  the  Virginia  cities'  to 
points  of  destination  in  North  Carolina.  That,  as  we  see  it,  is 
what  will  be  brought  about  by  this  adjustment,  and  we  fail  to 
see  in  the  contention  of  the  Virginia  cities  how  undue  discrimi¬ 
nation  or  any  discrimination  whatever  against  those  cities  will 
result  from  the  proposed  adjustment  which,  in  principle,  ac¬ 
cords  with  the  adjustment  prescribed  by  us  for  Durham  and 
Winston-Salem  in  Corporation  Commission  of  N.  C.  v.  N.  and 
W.  Ry.  Co.,  19  I.  C.  C.,  303.  An  order  will  be  entered  author- 


13 


izing  the  establishment  of  the  rates  proposed  from  the  Ohio 
River  cities  and  St.  Louis  and  the  establishment  of  the  pro¬ 
posed  proportional  rates  from  Memphis.” 

Again  in  10500-10515  (I.  C.  C.,  64,  p.  271)  the  Commission  re¬ 
quired  the  carriers  to  make  through  rates  from  all  territory 
east  of  and  including  Buffaio-Pittsburg  to  zone  one  in  North 
Carolina  on  differential  basis  of  60  cents  (now  54  cents)  over 
Richmond  and  Norfolk. 

So  that  we  have  the  situation  that  every  time  the  question 
of  through  rates  through  Virginia  gateways  to  zone  one,  North 
Carolina,  has  been  before  the  Commission  there  has  either  been 
recommended,  approved  or  prescribed  a  basis  of  rates  less  than 
the  use  of  full  local  rates,  and  in  one  case  a  reduction  of  the 
local  rates,  applicable  both  to- local  and  through  rates. 

With  all  this  history  of  official  condemnation,  it  should  be 
of  interest  to  note  the  whole  series  of  changes  which  the  car¬ 
riers  now  propose  to  employ  in  overthrowing  all  of  the  prog¬ 
ress  that  has  been  made  in  the  years  of  contest  over  this 
western  adjustment ;  in  nullifying  all  of  the  decisions  and 
orders  of  the  Commission  dealing  with  it,  and  in  effectuating 
their  purpose  of  making  rates  to  this  territory,  through  trunk¬ 
line  territory  and  over  the  trunk  lines,  on  the  same  basis  and 
mileage  level  as  their  proposed  rates  to  the  southeast,  where 
no  part  of  the  haul  is  in  trunk-line  territory,  or  over  lines 
employing  in  any  way  trunk-line  rates,  and  where  no  trunk¬ 
line  competitive  conditions  have  to  be  met : 

First.  They  propose  to  cancel  the  present  basis  of  divisions 
(the  old  32  cents  scale,  now  56  cents)  which  has  been  used  by 
the  trunk  lines  since  1886,  at  times  as  a  published  proportional 
rate,  and  at  times  as  a  basis  for  divisions,  but  always,  since 
1886,  employed  as  the  measure  of  their  part  of  the  revenue 
on  Cincinnati  traffic  for  Carolina  territory,  and  so  used  at  the 
present  time  with  such  uniform  percentage  changes  as  have 
applied  to  other  rates. 

Second.  They  propose  to  cancel  the  proportional  rates  which 
the  Carolina  lines  put  into  effect  by  agreement  in  1914  for  their 
part  of  the  haul  south  of  the  Virginia  gateways. 


14 


Third.  They,  as  part  of  this  program,  have  already  increased 
the  local  rates  (January,  1922)  Roanoke  to  Winston-Salem 
and  Lynchburg  to  Durham,  which  were  reduced  under  order 
of  the  Commission  in  I.  C.  C.  19,  p.  303,  putting  those  rates 
back  to  the  level -of  other  points  in  zone  one. 

Fourth.  They,  as  part  of  this  program,  increased  the  local 
rates  to  all  of  zone  one  (January,  1922),  including  a  further 
advance  in  the  Commission  reduced  rates  to  Winston-Salem 
and  Durham  4%  cents  per  100  pounds,  with  lower  classes 
raised  even  more  by  use  of  the  so-called  I.  and  S.  1261  per¬ 
centage  relationships.  The  following  figures  show  the  impor¬ 
tance  of  this  increase  on  the  lower  classes : 


1  2  3  4  5  6 

January,  1922  .  100  86  76  64  52  43 

Prior  rates  .  95.5  80  65.5  50  44  33 

Advances  .  4.5  6  10.5  14  8  10 


Fifth.  They  now  propose  to  further  advance  this  local  scale 
to  $1.11,  June  30th  basis  ($1  net  now),  although  this  local 
adjustment  of  rates  was  excluded  from  the  scope  of  this  inves¬ 
tigation. 

Sixth.  They  propose  to  advance  the  alternative  mileage 
scale  put  into  effect  by  them  in  January,  1922,  having  alterna¬ 
tive  application  south  of  Virginia  gateways. 

Seventh.  They  propose  to  cancel  the  full  Virginia  cities 
local  rates,  carried  by  the  Virginian  Railway  as  proportional 
rates  through  their  junction  points  on  Carolina  traffic. 

And  they  are  proposing  an  adjustment  of  through  rates  that, 
after  all  this  catalogue  of  successive  cancellation  of  propor¬ 
tional  rates  and  divisions,  and  of  increase  after  increase  of  local 
rates  (some  of  which  were  established  by  the  Commission  it¬ 
self),  they  will  still  have  to  employ  a  special  rule  in  their  tariffs 
to  prevent  rates  higher,  and  substantially  higher,  than  the  full 
combination  of  increased  local  rates. 

And  after  all  this  elaborate  plan  and  change  to  get  North 
Carolina  rates  on  the  full  southeastern  level,  how  can  it  be 
expected  to  stand? 


15 


After  all  the  progress  that  lias  been  made  in  the  sound  and 
beneficent  policies  encouraged  and  established  by  the  Inter¬ 
state  Commerce  Commission  of  eliminating  the  old  “basing 
points,”  with  the  dominating  and  unequal  and  unfair  advan¬ 
tages  which  the  construction  of  through  rates  on  their  full 
combinations  gave  to  them;  when  the  central  theme  and 
thought  of  this  whole  southeastern  readjustment  was,  by  con¬ 
sent  of  carriers  and  shippers,  to  get  away  from  the  only  re¬ 
maining  conspicuous  example  of  full  combination  rate  adjust¬ 
ments  east  of  the  Mississippi  River,  how  can  the  carriers  ex¬ 
pect  to  deny  to  North  Carolina  the  right  of  reasonable  through 
rates,  made  with  relation  to  the  level  of  rates  applying  over 
the  trunk  lines  which  form  the  short  lines  to  our  doors,  rather 
than  the  application  over  these  lines  of  the  southeastern  level 
of  rates,  and  to  subject  North  Carolina  to  the  unfair  and  un¬ 
equal  competition  within  its  own  front  yard  of  trunk  line  rates 
to  the  Virginia  cities  and  full  combination  of  increased  local 
rates  to  the  North  Carolina  cities? 

There  was  back  of  this  investigation  the  legitimate  hope  that 
there  would  come  from  it  an  adjustment  harmonized  to  meet 
all  conditions  and  end  rate  controversies  within  the  South. 
Surely  this  result  cannot  be  achieved  by  the  blind  application 
of  one  yardstick  to  all  varying  conditions,  resulting  in  rate 
adjustments  in  this  border  territory  more  restrictive  and  more 
discriminating  than  any  that  have  obtained  in  the  past,  and 
that  have  met  condemnation  by  the  Commission  whenever 
brought  under  its  review. 

We  will  not  discuss  at  this  time  suggestion  of  carriers  that 
there  may  be  a  further  increase  in  the  local  rates  from  Vir¬ 
ginia  cities  to  zone  one,  in  the  process  of  further  building  up 
of  local  factors  against  their  proposed  high  level  of  through 
rates,  as  these  local  rates  are  not  embraced  within  the  scope 
of  this  investigation,  but  something  more  should  be  said  of 
their  proposals  to  cancel  the  basis  of  rates  to  and  from  the 
gateways  that  make  up  the  present  through  rates  Cincinnati 
to  zone  one.  These  factors  are  shown  on  AVomble  Exhibit, 
No.  1202,  reproduced  on  next  page. 


.  Corporation  Commission  Exhibit  No.  1202 
C.  Docket  No.  13494 


16 


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Authority:  Agent  Cottrell,  I.  C.  C.  297  and  347;  Agent  Speiden,  I.  C.  C.  510. 


17 


Many  times  during  this  investigation  carrier  witnesses  have 
called  to  their  aid  the  support  of  the  argument  that  a  particu¬ 
lar  rate  had  been  of  long  standing.  That  is  of  course  not  a 

#  0 

conclusive  argument,  nor  yet  wholly  convincing  in  itself.  The 
old  32  cents  basis  of  rates  from  Cincinnati  to  Virginia  gate¬ 
ways  on  Carolina  traffic  has  stood  since  1886,  and  precisely  the 
same  condition  from  which  it  had  its  origin  and  thirty-seven 
years  of  continuance  exists  today  and  is  to  be  continued — the 
fact  that  the  same  lines  over  which  this  basis  applies  apply 
the  same  basis  on  rates  from  Chicago  to  Virginia  cities.  The 
32  cents  proportional  basis  was  30  cents  less  than  the  local 
rate,  Cincinnati  to  Virginia  cities.  The  Chicago  rate  to  Vir¬ 
ginia  cities  was,  in  1886,  30  cents  less  than  the  Cincinnati  com¬ 
bination,  and  approximately  this  same  factor,  reflecting  per¬ 
centage  changes,  sticks  in  the  rates  Chicago  to  Virginia  cities 
today.  The  lines  over  which  it  applies  have  offered  no  justi¬ 
fication  whatever  in  this  record  for  its  discontinuance  as  a 
proportional  or  divisional  basis  on  Carolina  traffic.  They  are 
prosperous  lines  and  can  live  handsomely  today  on  the  per¬ 
centage  advances  of  their  old  rate  levels.  If  one  of  the  old 
landmarks  in  the  structure  of  rates  is  to  be  set  aside,  is  it 
unreasonable  to  suggest  that  at  least  the  lines  over  which  it 
has  had  thirty-seven  years  of  uninterrupted  application  should 
put  their  own  witnesses  on  the  stand  to  justify  it  with  direct 
and  substantial  reasoning?  It  ought  not  to  be  left  to  their 
neighbors  and  competitors  to  make  out  the  case  for  them.  No 
witness  of  the  Norfolk  and  Western  or  the  Chesapeake  and 
Ohio  has  appeared  in  these  proceedings  to  ask  that  it  be  done 
or  to  offer  justification  for  it. 

As  to  the  proportional  rates  established  south  of  the  gate¬ 
ways  in  1914,  their  proposed  cancellation  was  drawn  out  of 
witness  representing  the  Carolina  lines,  on  cross-examination, 
but  no  serious  effort  has  been  made  to  justify  the  cancellation 
of  those  proportional  rates  except  the  suggestion  that  they 
were  originally  made  to  satisfy  popular  clamor.  Whatever 
the  moving  cause  of  this  tardy  measure  of  justice  to  the  ship¬ 
pers  of  North  Carolina,  the  Carolina  lines  did  agree  to  it  in 
settlement  of  complaints  pending  before  the  Commission  at 

2 


18 


that  time,  and  the  rates  became  effective  under  approval  of 
the  Commission  upon  application  of  the  Carolina  lines. 

The  proportional  rate  south  of  the  gateways  to  zone  one  was 
then  fixed  at  50  cents.  Under  percentage  advances  and  reduc¬ 
tions  it  is  now  70  cents.  It  has  been  at  all  times  a  not  unrea¬ 
sonably  low  basis  for  constructing  long  distance  through  rates 
for  an  average  haul  by  the  Carolina  lines  of  104  miles  south 
of  Virginia  cities,  and  of  85  miles  south  of  gateways  on  Vir¬ 
ginian  Railway,  and  is  more  liberally  reasonable  now  than 
when  it  was  established  by  agreement  at  50  cents.  No  reasons 
have  been  shown  to  justify  its  cancellation  except  as  it  be¬ 
comes  a  necessary  part  of  the  carriers’  program  to  put  the 
through  rates  through  trunk-line  territory  to  zone  one  on  the 
southeastern  rate  level,  and  we  submit  that  no  proper  justifi¬ 
cation  has  been  shown  for  the  proposal,  and  they  should  not 
be  permitted  to  cancel  these  proportional  rates  and  divisions 
unless  through  rates  substantially  reflecting  the  same  level  are 
prescribed  in  their  stead.  Certainly  there  is  nothing  in  this 
record  to  show  the  70  cents  proportional  rate  for  the  average 
of  104  miles  south  of  Virginia  cities  proper  and  of  85  miles 
from  Virginia  gateways  to  be  an  unreasonably  low  proportion 
of  a  through  rate,  or  to  justify  its  cancellation. 

CANNOT  JUSTIFY  HIGHER  RATES  TO  EASTERN  END 

OF  ZONE  ONE 

*  * 

We  have  discussed,  so  far,  the  proposed  adjustment  of  $1.75 
Cincinnati  to  Winston-Salem  and  the  western  end  of  zone  one. 

As  shown,  the  short  line  route  to  every  point  in  zone  one  is 
the  trunk-line  route  through  Virginia  gateways. 

Zone  one  was  established  about  1886,  and  has  continued 
without  material,  if  any,  change  in  its  boundaries  since  that 
time. 

The  zone  covers  some  250  miles  in  length  along  the  northern 
border  of  the  State,  and  down  to  and  including  stations  on 
the  east  and  west  line  of  the  Southern  Railway,  Goldsboro  to 
Winston-Salem. 

What  was  the  reason  for  making  a  zone  250  miles  in  length 
running  laterally  with  transportation  lines  from  the  west,  and 


19 


ignoring  distance  in  rates  from  the  west  as  between  cities  in 
the  eastern  and  western  ends  of  this  zone? 

The  same  reason  that  has  continued  to  exist  to  this  day,  and 
that  will  continue  to  exist,  and  that  must  preserve  the  parity 
of  rates  as  between  cities  in  the  eastern  and  western  ends  of 
the  zone  without  regard  to  distance — the  fact  that  just  across 
the  State  line  in  Virginia  there  is  a  like  rate  blanket  to  which 
rates  from  the  west  are  blanketed  along  the  trunk  lines  for  two 
hundred  and  fifty  miles  and  more  intermediate  to  Norfolk,  the 
very  lines  over  which  the  rates  make  to  all  points  in  zone  one. 
Just  across  the  State  line  the  rates  blanket  to  and  through  all 
the  gateways.  The  rate-making  routes  disregard  distance,  and 
will  continue  to  disregard  distance  to  the  contiguous  Virginia 
cities  group.  Their  rates  from  Cincinnati  are  the  same  to  Nor¬ 
folk,  Portsmouth,  Petersburg,  Richmond,  Lynchburg  and 
Roanoke,  without  regard  to  distance.  Their  formerly  pub¬ 
lished  proportional  rates  and  present  divisions  of  through  rates 
on  Carolina  traffic  are  the  same  through  all  these  gateways, 
without  regard  to  distance. 

No  direct  representative  of  any  of  these  Virginia  lines  has 
appeared  in  these  proceedings  to  propose  or  justify  any  change 
in  their  equalized  rates  to  all  Virginia  cities  or  equalized  divis¬ 
ions  through  all  gateways  to  zone  one  destinations. 

Upon  what  basis  could  they  justify  an  abandonment  of  that 
policy,  voluntarily  established  and  voluntarily  maintained  for 
nearly  forty  years,  and  proposed  to  be  continued  as  to  the 
Virginia  cities,  as  long  as  such  policy  of  ignoring  distance  is 
continued  as  to  Virginia  cities? 

As  long  as  this  policy  is  continued,  how  can  the  Southern 
lines  ask  for  higher  rates  or  divisions  for  hauling  traffic  one 
hundred  miles  south  of  Norfolk  than  for  hauling  traffic  100 
miles  south  of  Lynchburg? 

Their  service  is  precisely  the  same  in  either  case. 

Measuring  distance  by  transportation  rates,  as  it  is  meas¬ 
ured  by  the  Virginia  trunk  lines,  Norfolk  is  just  as  close  to 
Cincinnati  as  is  Roanoke,  and  a  point  100  miles  south  of  Nor¬ 
folk,  in  zone  one,  is,  by  the  same  standard,  as  close  to  Cin- 


20 


cinnati  as  is  a  point  in  zone  one  100  miles  south  of  Roanoke 
or  Lynchburg,  or  Richmond,  or  Petersburg. 

The  necessities  of  commercial  competition  as  between  North 
Carolina  and  Virginia  cities  are  the  same  in  either  case. 

The  carriers’  proposal  of  higher  rates  to  the  eastern  end  of 
zone  one  is  another  case  of  blindly  using  a  southeastern  yard¬ 
stick  to  measure  distance  in  a  territory  and  over  trunk  lines 
where  rates  are  not  measured  in  terms  of  miles. 

It  is  admitted  that  the  trunk  lines  form  the  short-line  routes 
to  all  these  points,  and  of  course  not  challenged  that  the  trunk 
lines  blanket  the  rates  from  Roanoke  to  Norfolk. 

What  has  the  southeastern  yardstick  to  do  with  making 
rates  to  or  through  these  respective  towns? 

No  suggestion  of  higher  rates  to  the  eastern  end  of  zone  one 
has  ever  been  made  in  the  forty  years  of  history  of  this  adjust¬ 
ment  until  this  attempted  use  of  the  southeastern  yardstick 
up  to  the  very  blanketed  border  of  trunk-line  territory,  and 
until  the  carriers  conceived  the  idea  of  making  rates  that 
would  open  up  under  fourth  section  observance  all  the  cir¬ 
cuitous  routes  through  southeastern  territory  to  these  zone  one 
points. 

If  higher  rates  should  be  made  from  Cincinnati  to  the  east¬ 
ern  end  of  zone  one,  making  through  Virginia  gateways,  why 
should  not  Chicago,  the  whole  of  Central  Freight  Association 
territory,  and  Buffalo-Pittsburg  rates,  making  through  the 
same  Virginia  gateways,  be  made  higher? 

The  carriers  are  even  now  proposing  the  same  rates  from 
Central  Freight  Association  territory  to  the  eastern  end  of  zone 
one  as  to  the  western  end  of  zone  one. 

If,  with  forty  years  of  age  and  precedent  and  reason  behind 
it,  it  is  now  proposed  to  continue  it  from  Central  Freight  As¬ 
sociation  territory,  through  the  same  gateways,  why  should 
it  be  changed  as  to  Cincinnati,  which  is  in  Central  Freight 
Association  territorv,  and  from  which  rates  make  through  Vir- 
ginia  cities? 

There  can  be  no  reason  for  this  proposed  change  except  that 
the  proposed  rates  from  Cincinnati  are  fallaciously  based  upon 
the  circuitous  southeastern  routes. 


21 


PROPOSALS  MADE  TO  MEET  NECESSITIES  OF  UNREA¬ 
SONABLY  CIRCUITOUS  ROUTES 

It  is  conceded  that  one  of  the  considerations  for  this  unrea¬ 
sonable  proposal  was  the  making  of  a  rate  structure  that  would 
put  southeastern  routes  to  this  territory  from  Cincinnati  on  a 
fourth  section  basis.  Quoting  from  testimony  of  witness  J.  E. 
Tilford  (1007-1008)  : 

“Q.  (By  Commissioner  Maxwell.)  Are  you  through  with 
your  discussion  about  Exhibit  196? 

“A.  Yes,  sir. 

“Q.  I  understood  you  to  say  that  you  had  worked  out  an 
adjustment  to  the  Carolina  territory  with  relation  to  the  routes 
from  the  Ohio  River  to  the  southeastern  points? 

“A.  That  is  true;  we  have  worked  the  adjustments  so  they 
would  dovetail. 

“Q.  In  the  figures  as  shown  on  your  Exhibit  196,  you  have 
worked  them  out  by  proposing  rates  to  points  in  eastern  North 
Carolina,  right  on  the  Virginia-North  Carolina  border,  from 
Cincinnati  as  high  or  higher  than  the  rates  to  any  intermediate 
point  through  any  of  the  southeastern  gateways. 

“A.  WELL,  THAT  WAS  NECESSARY  TO  AVOID 
FOURTH  SECTION  VIOLATIONS  AT  SOUTHEASTERN 
POINTS.” 

It  will  be  interesting  to  note  the  unreasonable  circuity  of 
the  various  routes  accommodated  to  fourth  section  observance 
by  this  proposed  adjustment. 

For  a  graphic  illustration  of  such  unreasonable  routes,  we 
have  sketched  on  the  next  page  some  of  the  most  unreasonable 
of  these  proposed  routes,  which  have  been  traced  from  witness 
J.  E.  Tilford ’s  map,  Exhibit  No.  196. 

We  are  not  considering,  at  this  time,  whether  these  routes 
should  be  absolutely  closed.  We  have  no  objection  to  their 
remaining  open  for  the  handling  of  traffic,  and  there  may  be 
times  when  it  would  be  in  the  public  interest  for  them  to  be 
open  routes  under  permission  from  the  Commission.  But  that 
it  is  unjustifiable  to  construct  a  rate  structure  to  maintain 
routes  as  unreasonably  circuitous  as  these  as  open  routes  is  too 
plain  for  serious  argument.  This  would  be  incontestible  if  the 


22 


competing  routes  were  all  within  southeastern  territory,  and 
over  routes  properly  employing  the  same  general  level  of  rates. 
It  is  difficult  to  treat  with  respectful  consideration  the  pro¬ 
posal  to  make  the  rates  to  fit  the  necessities  of  fourth  section 
observance  over  these  unreasonably  circuitous  routes  through 
southeastern  territory  as  against  the  direct  short-line  routes 
through  trunk  line  territory. 

In  this  connection  we  would  call  attention  to  the  testimony 
of  B.  G.  Brown,  chairman  of  the  Carolina  Committee  of  the 
carriers,  on  cross-examination  (pp.  4806-4814)  : 

“Q.  So  that  there  is  nothing  in  the  order  of  the  Commis¬ 
sion  in  I.  and  S.  Docket  1261  or  any  other  order  of  the  Com¬ 
mission,  other  than  the  order  for  this  investigation,  requiring 
a  revision  of  rates  from  the  Ohio  River,  Cincinnati  and  Louis¬ 
ville  particularly,  to  North  Carolina  points,  other  than  the  re¬ 
moval  of  fourth  section  violations? 

‘‘A.  That  is  correct,  Mr.  Maxwell. 

“Q.  Now,  as  to  fourth  section  violations,  I  want  to  ask  you 
to  name  the  several  routes  by  which  traffic  is  handled  between 
Cincinnati  and  Louisville  and  points  in  North  Carolina. 

‘‘A.  I  will  at  least  try  to  give  the  principal  routes.  There 
are  quite  a  number.  The  Southern  Railway  has  a  route  through 
Asheville.  There  are  routes  via  the  Southern  Railway  and 
other  lines  through  Atlanta ;  still  other  routes  operating 
through  Augusta,  Ga.  To  a  portion  of  the  Carolina  territory 
there  is  also  a  route  of  the  C.  C.  and  0.  into  Spartanburg.  Via 
the  Virginia  gateways  there  are  routes  in  connection  with  the 
C.  and  0.  and  the  N.  and  W.  through  quite  a  number  of  gate¬ 
ways.  The  principal  ones  are  Roanoke,  Lynchburg,  Peters¬ 
burg,  Richmond,  Norfolk,  and  Suffolk,  Va.  I  do  not  recall 
that  at  the  present  time  the  Virginian  Railway,  with  its  routes 
also  through  Virginia  gateways,  handles  Cincinnati-Louisville 
traffic  to  the  Carolinas.  It  is  my  impression  that  they  do  not 
do  so  at  this  time,  although  they  largely  form  the  short  line 
to  a  part  of  the  territory. 

“Q.  The  Virginian,  you  say? 

“A.  Yes,  sir.  It  is  their  purpose,  however,  to  participate 
in  the  proposed  adjustment. 

“Q.  (By  Mr.  Rixey.)  Has  not  the  Louisville  and  Nash¬ 
ville  a  route  through  Jellico? 

“A.  That  is  one  of  the  several  routes  that  I  referred  to 
briefly  as  being  through  Asheville.  The  L.  and  N.  brings  the 


5o  , 


™  a  w 


MAP  INDICATING  SHORT  TRUNK-IANE  ROUTES  BETWEEN  CINCIN¬ 
NATI  AND  NORTH  CAROLINA  ZONE  1  POINTS,  COMPARED  WITH 
CIRCUITOUS  ROUTES  THROUGH  SOUTHEASTERN  TERRITORY 


R  stands  Tor  Carriers’  Proposed  Rate. 


23 


traffic  to  the  Southern  Railway  at  Jellico,  Tenn.,  which  the 
Southern  handles  through  Asheville.  The  Cincinnati,  New 
Orleans  and  Texas  Pacific  brings  traffic  to  the  Southern  Rail¬ 
way  at  Harriman,  and  the  Southern  handles  it  through  Ashe¬ 
ville. 

“Q.  (By  Mr.  Maxwell.)  Are  there  not  through  rates  and 
divisions  in  effect  via  the  Virginian  Railway  gateways'? 

“A.  My  recollection  is,  Mr.  Maxwell,  and  I  am  basing  it 
on  a  statement  made  to  me  by  the  general  freight  agent  of  the 
Virginian  Railway  some  months  ago,  possibly  a  year  ago,  that 
his  company  did  not  at  that  time,  and  had  not  participated 
in  that  Carolina  traffic  from  Cincinnati  and  Louisville,  but 
had  done  so,  of  course,  from  Central  Freight  Association 
territory. 

“Q.  Is  it  their  purpose  to  do  so  again? 

“A.  It  is  their  purpose  here  to  join  in  the  Cincinnati-Louis- 
ville  adjustment. 

“Q.  Now,  as  to  the  routes  through  the  Virginia  gateways, 
speaking  in  general  terms,  are  there  fourth  section  violations 
in  the  rates  from  Cincinnati  and  Louisville  through  the  Vir¬ 
ginia  gateways  to  North  Carolina  destinations? 

“A.  I  think  it  is  safe  to  say  that,  generally  speaking,  there 
are  not.  Of  course  we  have  some  of  the  water  points  in  the 
eastern  part  of  the  State  that  perhaps  reflect  violations,  but 
generally  we  have  got  very  few  fourth  section  violations  by 
the  Virginia  gateway  routes. 

“Q.  That  is  true,  first,  for  the  reason  that  the  Virginia 
trunk  lines  have  for  many  years  observed  fourth  section  prin¬ 
ciples? 

“A.  Yes,  sir;  and  that  the  Carolina  lines  have  for  many 
years  observed  fourth  section  principles  from  the  Virginia 
cities. 

“Q.  That  was  for  the  reason  that  the  participation  of  the 
Carolina  lines  in  traffic  through  the  Virginia  gateways  is  based 
on  rates  to  the  zone  nearest  the  Virginia  gateways  from  Cin¬ 
cinnati  and  Louisville,  less  than  the  rates  to  the  next  zone, 
with  the  rates  to  the  second  zone  less  than  to  the  third  zone,  so 
that  they  are  built  up  that  way  on  a  zone  basis  having  some 
relation  to  distance,  and  generally  at  least  with  no  fourth  sec¬ 
tion  violations? 

“A.  That  is  correct,  Mr.  Maxwell;  that  is  to  say,  the  desti¬ 
nation  relationships  as  to  Cincinnati  and  Louisville  traffic  have 
largely  if  not  absolutely  reflected  the  relationships  that  ex¬ 
isted  in  the  rates  from  the  Virginia  cities  proper. 


24 


“Q.  And  the  same  thing  would  be  true  with  respect  to 
traffic  from  Central  Freight  Association  territory  and  Buffalo- 
Pittsburg  territory  ? 

“A.  Yes,  sir. 

“Q.  Now,  as  to  the  southeastern  routes,  take  first,  the  Sea¬ 
board  Air  Line  Railway.  That  has  rates  and  divisions  in  effect 
on  traffic  from  Cincinnati  and  Louisville  through  what  points, 
what  southern  gateways? 

“A.  Through  Atlanta  certainly. 

“Q.  And  probably  through  Birmingham? 

“A.  I  would  not  say  so  from  Cincinnati  and  Louisville,  but 
undoubtedly  so  from  Cairo,  Evansville  and  St.  Louis.  * 

“Q.  And  certainly  through  Atlanta  from  Cincinnati  and 
Louisville  ? 

“A.  Yes,  sir. 

“Q.  Do  you  know  if  it  has  been  the  policy  of  the  Seaboard 
not  to  solicit  shipments  from  the  West  through  the  Atlanta 
gateway  for  destinations  in  North  Carolina  north  of  Monroe, 
N.  C.,  a  point  on  the  North  Carolina-South  Carolina  border? 

“A.  Frankly  I  did  not  know  that,  Mr.  Maxwell. 

“Q.  Well,  just  taking  the  situation  as  you  know  it  to  be, 
wouldn’t  it  occur  to  you  as  a  sound  practical  policy  for  the 
Seaboard  to  prefer  to  take  these  shipments  from  the  nearer 
Virginia  gateway  and  handle  them  over  what  is  the  best  de¬ 
veloped  section  of  the  Seaboard  Air  Line  Railway  system, 
rather  than  to  take  them  from  the  further  removed  south¬ 
eastern  gateways? 

“A.  Well,  I  don’t  know  that  I  could  agree  with  you  on 
that.  I  should  say  that  a  given  railroad  in  determining  its 
policy  as  to  the  preferred  gateways  on  any  traffic  would  neces¬ 
sarily  take  into  consideration  a  number  of  conditions.  The 
Seaboard  Air  Line  might  find  it  profitable  to  engage  in  that 
business  through  the  Atlanta  gateway,  or  might  have  found  it 
so.  -  I  do  not  know  that  they  have  done  so.  I  am  speaking  of 
the  territory  now,  as  I  understood  you  to  say,  north  of  the 
Carolina  State  line. 

“Q.  I  am  asking  you  more  particularly  with  respect  to  the 
economics  of  the  situation.  From  your  knowledge  of  the  situ¬ 
ation,  wouldn’t  it  be  a  more  economical  routing  to  handle  the 
traffic  if  the  Seaboard  Air  Line  should  take  Cincinnati  and 
Louisville  business  from  the  Virginia  lines  at  Petersburg  or 
Richmond  to  North  Carolina  destinations  than  from  Atlanta 
and  Birmingham? 

“A.  Well,  I  do  not  hesitate  to  say  that  as  to  the  Southern 
Railway - 


“Q.  Mr.  Brown,  I  was  asking  you  about  the  Seaboard  Air 
Line. 

“A.  I  don’t  like - 

“Q.  You  know  that  general  situation? 

‘‘A.  I  just  do  not  like  to  make  a  statement  about  the  Sea¬ 
board  Air  Line  policy  that  I  naturally  do  not  know. 

“Q.  We  are  away  from  the  question  of  policy  now,  and  I 
am  asking  you  as  to  the  economics  of  it. 

“A.  At  least  on  the  present  level  of  rates,  I  expect  it  might 
be  the  best  for  them  to  turn  the  traffic  loose  as  soon  as  they 
could. 

“Q.  And  that  would  be  to  take  it  at  the  Virginia. gateways? 

“A.  Yes,  sir. 

“Q.  Do  you  know  the  same  thing  to  be  true  with  respect 
to  the  Atlantic  Coast  Line? 

“A.  I  should  say  so. 

“Q.  That  would  be  substantially  the  same  situation? 

“A.  I  am  pretty  certain  that  the  Atlantic  Coast  Line  does 
not  today  solicit  traffic  into  what  we  call  Zone  1,  like  Golds¬ 
boro  and  Raleigh.  I  do  not  think  the  Atlantic  Coast  Line 
solicits  Cincinnati-Louisville  business  via  the  Augusta  route 
today. 

“Q.  They  have  rates  and  divisions  in  effect,  but  in  your 
opinion  they  do  not  solicit  the  business,  and  would  prefer  to 
handle  it  on  the  short  haul? 

“A.  Well,  the  rates  might  technically  be  in  effect.  Cer¬ 
tainly  I  do  not  know  of  any  divisions  being  in  effect.  I  had 
a  rather  extensive  correspondence  with  them  on  that  some 
time  ago.  The  Southern  Railway  got  hold  of  a  shipment  going 
to  New  Bern,  somewhere  in  there,  and  tried  to  turn  it  loose 
to  the  Coast  Line  at  Columbia.  We  knew  there  were  no  divis¬ 
ions,  and  it  cost  us  some  money  before  we  got  through  with 
that  deal. 

“Q.  Just  what  is  the  make-up  of  that  Coast  Line  route 
through  Atlanta  from  Cincinnati  and  Louisville? 

“A.  Well,  as  I  say,  I  do  not  understand  that  that  is  a 
practical  matter.  There  is  a  route  through  Atlanta  and 
Augusta  now  into  the  upper  part  of  the  State. 

“Q.  What  lines  would  it  move  over? 

“A.  If  there  were  such  a  route,  the  Georgia  Railroad  likely, 
through  Augusta,  and  then  the  Atlantic  Coast  Line.  There 

may  be  a - 1  suppose  that  is  about  the  only  way  they  could 

handle  it. 

“Q.  I  take  it  as  a  matter  of  course.  Does  the  Southern 
handle  any  business  through  Atlanta  from  Ohio  River  points 
to  North  Carolina  destinations? 


26 


“A.  To  the  zone  we  are  speaking  of? 

“Q.  Yes. 

“A.  Not  if  we  can  avoid  it.” 

We  have  here  the  peculiar  situation  that  it  is  admitted  by 
carrier  witnesses  that  the  proposed  rates  to  North  Carolina 
points  were  made  with  relation  to  opening  up  these  circuitous 

southeastern  routes  as  fourth  section  routes,  and  the  frank 

«  * 

admission  that  it  will  be  uneconomical  for  any  of  the  Carolina 
lines  to  use  the  southeastern  routes — uneconomical  for  the 
Seaboard  and  Coast  Line,  and  that  the  Southern  doesn’t  use 
these  routes  now  “if  it  can  avoid  it.” 

It  is  no  defense  of  these  proposals  to  say  that  they  have  not 
applied  the  proposed  southeastern  level  of  rates  to  the  greater 
distances  via  these  circuitous  routes.  They  have  applied  the 
southeastern  level  of  rates  for  the  mileage  over  trunk  lines 
through  trunk-line  territory  to  the  pivotal  points  in  the  group 
and  for  the  purpose  of  making  rates  high  enough  to  meet  the 
highest  rates  applied  to  any  intermediate  points  over  circuitous 
routes  through  southeastern  territory.  Neither  the  southeast¬ 
ern  rate  level  nor  the  convenience  of  circuitous  southeastern 
routes  have  anything  to  do  with  making  rates  over  the  direct 
lines  through  trunk-line  territory  to  points  in  North  Carolina. 

THE  ASHEVILLE  ROUTE 

So  that,  after  having  constructed  their  proposals,  admittedly 
to  meet  fourth  section  observance  by  all  these  routes,  Mr. 
Brown  was  then  driven  to  the  admission  that  only  the  route 
through  Asheville  has  a  practical  interest  in  fourth  section 
question  to  this  territory  (p.  4814)  : 

“Q.  That  would  reduce  the  fourth  section  question,  then, 
from  a  practical  standpoint,  to  the  route  of  the  Southern  Rail¬ 
way  through  Asheville,  would  it  not? 

“A.  Absolutely.  The  routes  through  Atlanta  and  Augusta 
have  had  no  concern  with  fourth  section  violations  in  this  ad¬ 
justment  to  the  Zone  1  territory.” 

This  admission  brings  us,  frankly,  the  elimination  from  con¬ 
sideration  of  all  other  routes  over  southeastern  lines  to  Zone  1. 


27 


These  other  routes,  admittedly,  are  entitled  to  no  consider¬ 
ation  in  making  these  rates. 

Now  let’s  inquire  what  consideration  the  route  of  the  South¬ 
ern  Railway  through  Asheville  is  entitled  to  have  in  making 
these  rates  from  Cincinnati  to  Zone  1. 

Zone  1  is  entitled  to  have  its  rates  made  over  the  direct  and 
most  efficient  routes,  and  on  the  level  of  rates  employed  by 
those  routes. 

There  should  be  no  disagreement  about  that. 

To  every  point  in  Zone  1  the  trunk  lines  make  the  short-line 
route. 

To  two  of  the  largest  cities  in  the  zone,  considered  by  the 
carriers  as  pivotal — Winston-Salem  and  Durham — one  of  the 
trunk  lines,  the  Norfolk  and  Western,  has  a  single-line  haul 
from  origin  to  destination,  and  all  of  the  distance  except  122 
miles  from  Roanoke  to  Winston-Salem  and  117  miles  from 
Lynchburg  to  Durham  is  over  the  main  line  of  the  Norfolk 
and  Western’s  trunk  line.  The  total  distance  from  Cincinnati 
to  Winston-Salem  over  the  single  line  of  the  Norfolk  and 
Western  is  136  miles  less  than  its  mileage  from  Cincinnati  to 
Norfolk,  and  to  Durham  87  miles  less  than  to  Norfolk.  (See 
next  page  for  graphic  illustration.) 

The  southeastern  level  of  rates  does  not  apply  over  these 
lines  and  cannot  in  good  conscience  be  made  to  apply  in  con¬ 
structing  rates  over  them  to  these  points  in  North  Carolina. 

The  line  of  the  Southern  Railway  through  Asheville  is  not 
the  short  line  to  any  point  in  zone  one.  Its  average  circuity 
to  all  points  in  the  zone  is  86Yo  miles. 

Every  mile  of  its  line  is  in  southeastern  territory ;  it  has 
heavy  mountainous  grades  and  curves  and  does  not  compare 
in  density  of  traffic  or  operating  efficiency  with  the  Virginia 
trunk  lines  or  with  its  own  lines  reaching  many  of  these  desti¬ 
nations  in  connection  with  the  trunk  lines. 

We  invite  attention  to  another  quotation  from  the  fourth 
section  brief  of  the  Southern  and  other  Carolina  lines  (Womble 
Exhibit  No.  1172)  showing  that  those  lines  have  not  been 
“and  cannot  be”  material  factors  in  the  adjustment  of  rates 
under  consideration : 


28 


“The  purpose  of  the  evidence  introduced  along*  this  line  is 
to  clearly  show  how  these  low  rates  or  proportions  accepted  or 
applied  by  the  trunk  lines  on  Carolina  traffic  absolutely  over¬ 
come  the  matter  of  distance  or  mileage  shown  compared  with 
rates  which  the  Southern  or  Carolina  lines  can  afford  to 
accept,  and  place  the  Carolina  lines  operating  via  the  Ashe¬ 
ville,  or  the  Spartanburg-Columbia,  or  the  Atlanta  routes,  at 
a  distinct  and  striking  disadvantage  as  compared  with  the 
routes  via  the  Virginia  cities.  Not  only  is  this  true  where  the 
mileage  via  the  Carolina  routes  is  more  circuitous  or  approxi¬ 
mates  the  mileage  via  the  Virginia  cities  routes,  but  it  is  like¬ 
wise  true  where  via  any  of  the  Carolina  routes  the  distance  is 
less  to  certain  Carolina  destinations  from  the  Ohio  River  than 
via  the  Virginia  cities  routes. 

“Owing  to  the  absolutely  controlling  influence  of  this  trunk 
line  adjustment,  and  the  low  level  of  rates  or  proportions 
applied  by  the  trunk  lines  from  the  Ohio  River  and  beyond  to 
Virginia  cities,  and  accepted  by  them  on  Carolina  traffic,  the 
distance  via  Asheville,  even  where  the  route  is  the  short  line, 
have  not  been  and  cannot  be  material  factors  in  the  adjust¬ 
ment  of  rates  from  the  west  to  points  in  that  portion  of  North 
Carolina  east  of  Statesville  or  Gastonia,  or  to  points  in  Vir¬ 
ginia  in  still  closer  proximity  to  the  Virginia  cities.  Indeed, 
the  controlling  influence  of  the  Virginia  cities  routes  makes 
itself  felt  as  far  west  as  Ashevlle  on  the  Southern  Railway’s 
route  via  Asheville  (pp.  51-52). 


“When  it  is  shown  that  the  factors  applied  by  such  lines 
as  the  Norfolk  and  Western  and  Chesapeake  and  Ohio  from 
Central  Freight  Association  territory  to  Virginia  cities  are  far 
below  any  rates  in  the  South,  and  necessarily  measure  and  fix 
the  rates  to  the  low-rated  territory  here  involved,  it  will  be 
manifest  that  when  these  much  stronger  trunk  lines,  with  their 
far  greater  density  of  traffic,  easier  operating  conditions,  and 
vastly  superior  earnings,  can  and  will  continue  to  dominate 
the  situation  irrespective  of  the  question  of  distance" 
(pp.  52-3). 


“On  account  of  the  trunk  line  adjustment  applied  from  the 
whole  of  Central  Freight  Association  territory  to  the  Virginia 
cities,  another  inevitable  result  is  that  the  influence  of  this  low 
adjustment,  brought  into  Southern  territory  as  far  South  as 
the  Virginia  cities,  must  and  will  be  reflected  beyond  these 
gateways  into  and  throughout  Carolina  territory”  (p.  62). 


C/a/c/M/va  r/ 


WOMBLE  EXHIBIT  No.  1181 


/lLUSTKAT/VG  R£L  ATI  Kif  D ISTAASCE  FROM  C/fiSC/  Ass/A  Tf  of  14*6* fif/A 

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(SC4jL£-£/m  =  tow.) 


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Stress:  Wo  able 
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- - ~ 


29 


The  foregoing*  quotations  from  their  own  words  represent 
the  historical  position  and  contentions  of  these  carriers  for 
all  the  years  of  the  continuance  of  this  adjustment.  There 
has  been  no  change  in  the  basic  elements  of  the  situation. 

In  “Rates  to  North  Carolina  Points/’  29  I.  C.  C.,  p.  556,  the 
Commission  found  that  the  Asheville  route  of  the  Southern 
Railway  “Is  clearly  at  a  disadvantage  in  making  rates  to  the 
territory  east  of  Salisbury.”  This  disadvantage,  in  compari¬ 
son  with  the  trunk-line  route,  is  based  upon  these  important 
factors : 

The  mountainous  country  through  which  it  operates,  with 
heavy  mountainous  grades  and  curves. 

Its  operation  through  southeastern  territory,  where  higher 
rates  are  generally  observed. 

Its  circuitous  route  and  greater  mileage. 

These  natural  disadvantages  of  the  Asheville  route  of  the 
Southern  Railway  make  it  clear  that  if  it  insists  upon  the  right 
to  continue  in  this  business,  it  must  do  so  upon  the  terms  it 
has  always  recognized — a  frank  recognition  of  its  disadvan¬ 
tage,  for  which  it  must  either  obtain  permission  for  non-observ¬ 
ance  of  the  fourth  section,  or  meet  the  fourth  section  by  reduc¬ 
tion  of  its  intermediate  rates. 

It  has  had  fourth  section  relief  over  this  route  all  these  years, 
and  has  maintained  substantially  higher  rates  to  intermediate 
points  as  far  west  as  Asheville,  and,  on  some  classes,  beyond 
Asheville. 

It  now  proposes  to  put  that  route  on  a  fourth  section  basis 
by  raising  the  rates  to  every  point  on  the  line,  not  only  to  the 
full  southeastern  level,  but  in  some  cases  substantially  higher, 
mile  for  mile,  than  the  full  southeastern  level.  Its  proposed 
rate  to  Morganton  is  fifteen  cents  higher,  for  the  same  dis¬ 
tance,  than  its  proposed  rate  to  Atlanta.  On  a  line  that  has 
been  operated  at  this  proclaimed  and  recognized  disadvantage, 
and  upon  rates  protected  by  fourth  section  relief,  it  would  in¬ 
crease  the  rates  to  every  station  on  this  line  from  Asheville 
to  Salisbury. 


30 


OPERATING  CONDITIONS  OF  SOUTHEASTERN  LINES 

WITHIN  NORTH  CAROLINA 

Dealing  with  the  adjustment  from  Cincinnati  to  North  Caro¬ 
lina,  zone  one,  we  have  endeavored  so  far  to  show  that  the 
carriers’  proposals  are  indefensible  because  they  have. ignored 
the  level  of  rates  historically  and  at  the  present  time  employed 
over  the  trunk  lines,  which  constitute  the  short-line  route  in 
every  case  between  these  points,  and  because  the  carriers  now 
seek  to  apply  over  these  trunk  lines,  in  reaching  North*  Caro¬ 
lina  destinations,  the  rate  level  which  the  carriers  now  seek 
to  put  in  effect  over  southeastern  lines,  which  have  always 
had,  and  presumably  for  many  years  will  of  necessity  have  to 
employ,  higher  levels  of  rates  than  those  in  effect  on  the  trunk 
lines. 

They  would  leave  us  at  the  mercy  of  unequal  competition 
with  the  Virginia  cities,  which  have  the  trunk-line  rates,  and 
while  continuing  to  haul  our  freight  over  these  same  trunk 
lines  would  require  us  to  pay  the  southeastern  rates  for  the 
trunk-line  service. 

There  is  another  important  element  which  the  carriers  have 
ignored,  and  which  we  will  now  ask  to  have  considered. 

We  have  shown  that  one  of  these  trunk  lines,  the  Norfolk 
and  Western,  reaches  with  its  own  rails,  by  single-line  haul 
from  Cincinnati,  two  of  the  principal  cities  in  zone  one,  and 
the  two  cities  which  the  carriers  themselves  have  designated 
as  the  pivotal  points  in  the  zone,  Winston-Salem  and  Durham. 
(Womble  Exhibit,  No.  1168.) 

These  advantages  clearly  distinguish  the  rate  structure  Cin¬ 
cinnati  to  zone  one  from  any  adjustment  to  the  southeast. 
Every  foot  of  the  way  from  Ohio  River  crossings  to  all  points 
in  the  southeast  and  the  Mississippi  Valley  is  over  southeastern 
lines,  where  higher  rates  are  consistently  employed. 

The  carriers,  in  their  proposals,  have  also  ignored  the  fact, 
which  is  clearly  demonstrated  in  evidence,  that  for  the  aver¬ 
age  haul  of  85  miles  south  of  the  gateways,  and  an  average  of 
104  miles  south  of  Virginia  cities  proper,  to  .these  points  in 
zone  one,  the  character  of  railway  lines  for  this  short  part  of 


the  haul  is  superior  to  the  transportation  lines  in  any  other 
part  of  the  South;  that  these  lines  not  only  border  on  trunk¬ 
line  territory  geographically,  but  that  in  physical  character¬ 
istics  and  density  of  traffic — in  gross  and  net  earnings — these 
parts  of  these  southeastern  lines  partake  of  the  characteris¬ 
tics  of,  and  have  all  the  transportation  advantages  of,  the 
trunk  lines. 

For  convenient  reference  we  are  reproducing  in  the  follow¬ 
ing  pages  Womble  exhibits  numbered  1187,  1188  and  1189. 
These  exhibits  cover  ten  years  of  operations  of  the  Southern 
Railway,  Atlantic  Coast  Line  and  Seaboard  Air  Line,  giving 
separately  the  gross  and  net  earnings  for  each  system  per  mile 
of  road  and  per  mile  of  road  within  North  Carolina.  Taking 
the  ten-year  average,  the  superiority  of  net  earnings  within 
North  Carolina,  compared  with  system  earnings,  is,  for  the 
Southern  56  per  cent,  for  the  Coast  Line  19.7  per  cent,  and  for 
the  Seaboard  153  per  cent. 

The  strikingly  superior  gross  and  net  operating  revenues  per 
mile  of  road  in  North  Carolina  are  produced  under  rates  which 
the  carriers  repeatedly  designate  as  depressed,  compelled,  and 
sub-normal. 

These  statements,  covering  a  ten-year  period,  show  that 
North  Carolina  is  related  to  trunk-line  territory  not  only  in 
geographical  proximity — not  only  in  having  to  meet  the  com¬ 
mercial  competition  of  trunk-line  rates  to  the  Virginia  cities — 
but  that  we  have  in  fact  trunk-line  conditions  on  the  south¬ 
eastern  lines  within  North  Carolina  with  respect  to  traffic 
density  and  net  earnings. 

CONFIRMED  BY  MR.  PLANT’S  REBUTTAL  TESTIMONY 

The  showing  made  by  these  exhibits  was  strengthened, 
rather  than  weakened,  by  the  rebuttal  testimony  of  Mr.  A.  H. 
Plant,  comptroller  of  the  Southern  Railway.  None  of  the 
other  lines  made  any  effort  to  meet  this  testimony,  and  Mr. 
Plant’s  theories,  by  which  he  sought  to  discredit  the  force  of 
his  own  sworn  reports  to  the  North  Carolina  C orporation  Com¬ 
mission,  add  strength  to  the  original  testimony  of  Mr.  Womble. 


32 


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Authority:  Annual  reports  of  Atlantic  Coast  Line  Railroad  Company  to  North  Carolina  Corporation  Commission. 


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Authority  Annual  reports  of  Seaboard  Air  Line  Railway  Company  to  North  Carolina  Corporation  Commission. 


35 


Mr.  Plant’s  reports  have  for  years  shown  gross  and  net 
operating  revenues  for  his  lines  in  North  Carolina  substanti¬ 
ally  greater  than  for  the  Southern  Railway  system.  He  sought 
to  discredit  this  by  a  theory  that  his  system  of  accounting  did 
not  represent  an  exact  allocation  of  expenses ;  that  all  terminal 
expenses  are  assigned  to  the  State  in  which  they  are  incurred ; 
that  the  larger  terminals  of  the  Southern  Railway  are  located 
outside  of  North  Carolina,  and  therefore  our  State  is  not 
charged  with  a  sufficient  proportion  of  such  expense.  When 
Mr.  W.  H.  Gatchel,  assistant  vice-president  of  the  Southern 
Railway,  was  on  the  stand,  he  frankly  demonstrated  that  not 
only  the  largest  assemblying  and  transfer  terminals  of  the 
Southern  Railway  system  are  located  in  North  Carolina,  at 
Spencer,  but  he  gave  his  opinion  that  it  is  “the  largest  ter¬ 
minal  for  handling  less-carload  freight  south  of  Philadelphia, 
if  not  in  the  whole  country.  ’  ’  And  the  exhibit  which  he  agreed 
to  put  in  the  record,  the  Southern  Railway  catalogue  of  au¬ 
thorized  package  car  loadings,  showed  24.7  per  cent  of  all 
authorized  package  car  loadings  for  the  Southern  Railway  sys¬ 
tem  were  to  break  bulk  at  yards  in  North  Carolina,  while  there 
is  only  18.9  per  cent  of  the  mileage  of  the  Southern  Railway 
system  within  North  Carolina. 

Relatively  the  same  situation  exists  with  the  Atlantic  Coast 
Line,  with  its  mammoth  terminals  at  South  Rocky  Mount, 
North  Carolina,  and  with  the  Seaboard  at  Hamlet,  North  Caro¬ 
lina. 

Does  not  this  indicate  that  North  Carolina  is  charged  with 
more  than  its  ratable  proportion  of  terminal  expenses?  It  is 
obvious  that  this  terminal  expense  of  handling  less-carload 
freight  is  much  greater  than  for  carload  freight. 

Each  of  these  lines  also  have  their  terminals  in  this  State 
for  breaking  up  and  making  up  of  through  trains  of  carload 
freight,  and  all  the  expenses  of  these  terminals  are  charged, 
according  to  Mr.  Plant’s  testimony,  against  their  earnings 
within  North  Carolina,  without  any  segregation  of  intrastate, 
interstate  and  trans-state  service,  and  a  large  part  of  the 
service  performed  at  these  stations  is  for  trans-state  tiaffic, 
both  carload  and  less-carload. 


36 


So  that,  to  the  extent  that  more  than  an  average  proportion 
of  terminal  service  is  performed  and  expense  charged  in  this 
State,  to  that  extent  the  net  revenues  shown  in  Mr.  Plant’s 
reports  creditable  to  North  Carolina  operations  are  less  than 
they  should  actually  be. 

GROSS  AND  NET  REVENUE  ON  MAIN  LINE  OF  SOUTH¬ 
ERN  RAILWAY  IN  NORTH  CAROLINA  GREATER 
THAN  ON  ANY  OF  THE  VIRGINIA  TRUNK  LINES 

The  showing  made  of  heavier  traffic  density,  of  larger  gross 
and  net  operating  revenues  within  North  Carolina,  is  further 
strengthened  by  Mr.  Plant’s  Exhibit  1917,  showing  gross 
operating  revenue  per  mile  for  the  main  line  of  the  Southern 
Railway  across  and  within  the  State  of  North  Carolina  of 
$66,676  per  mile,  and  net  revenue  of  $23,546  per  mile. 

The  figures  presented  in  the  Womble  exhibits  covered  all 
of  the  mileage  operated  by  each  of  these  systems  within  North 
Carolina.  For  the  Southern  Railwav  this  covered  1,219  miles 
of  road,  or  nearly  one-fifth  of  the  total  mileage  operated  by 
the  Southern  Railway  system,  and  includes  a  heavy  propor¬ 
tion  of  branch  line  mileage.  We  were  not  prepared  to  give 
definite  information  as  to  traffic  density  on  the  main  line  of 
the  Southern  in  North  Carolina.  This  information  was  fur¬ 
nished  by  Mr.  Plant,  in  his  Exhibit  No.  1917,  which  also  gives 
like  figures  for  other  main-line  stems  handling  heavy  traffic 
in  the  South,  and  this  shows  that  the  Southern  Railway  main 
line  in  North  Carolina  has  greater  gross  and  net  revenue  than 
any  piece  of  railroad  in  the  South.  The  next  highest  is  the  line" 
from  Cincinnati  to  Chattanooga,  with  gross  revenue  $56,076 
per  mile,  and  net  revenue  $10,240.  The  main  line  of  the  South¬ 
ern  in  North  Carolina  exceeds  this  by  $10,600  per  mile  gross, 
and  $13,306  per  mile  of  net  revenue.  Traffic  density  and  earn¬ 
ings  on  the  Cincinnati,  New  Orleans  and  Texas  Pacific  have 
been  before  the  Commission  in  many  cases  and  received  flat¬ 
tering  comment.  It  has  perhaps  been  considered  the  strongest 
section  of  railroad  in  the  South.  The  separate  earnings  of  the 
main  line  of  the  Southern  Railway  across  North  Carolina  have 


37 


never  before  been  developed  before  the  Commission,  and  the 
showing  made  by  Mr.  Plant’s  exhibit  is  indeed  impressive. 
His  exhibit  shows  the  net  operating  revenue  per  mile  on  this 
line  ($23,546)  to  be  substantially  greater  than  the  average  of 
gross  revenue  per  mile  ($19,710)  for  the  Southern  Railway 
system.  It  shows  even  heavier  gross  and  net  revenue  than  is 
shown  for  any  of  the  trunk  lines  in  Virginia. 

Womble ’s  Exhibit  No.  1199  covers  operations  of  the  Chesa¬ 
peake  and  Ohio,  Norfolk  and  Western  and  Virginian  for  a 
ten-year  period.  The  Norfolk  and  Western  shows  heavier 
operating  revenue  than  either  of  these  Virginia  trunk  lines, 
and  the  greatest  shown  for  any  year  for  the  Norfolk  and  West¬ 
ern  is  $40,216.50  for  the  year  1920.  The  total  mileage  of  the 
Norfolk  and  Western  is  only  2,200  miles  of  road,  so  that  a 
large  proportion  of  its  total  mileage  is  main-line  mileage.  We 
have  no  means  of  showing  separately  the  operating  revenue 
for  its  main  line,  but  it  must  be  a  safe  assumption  from  these 
figures  that  it  would  be  less  than  $66,676  per  mile,  and  it  must 
be  a  safe  assumption  again  that  there  isn’t  a  section  of  road  on 
either  the  Norfolk  and  Western,  Chesapeake  and  Ohio,  or  the 
Virginian  which  earns  as  heavy  operating  revenue  as  Mr.  Plant 
has  shown  for  the  main  line  of  the  Southern  through  the  State 
of  North  Carolina.  .(Exhibit  shown  on  next  page.) 

An  even  more  surprising  statement  than  is  this  comparison 
of  Southern  Railway  main  line  with  other  sections  of  main  line 
in  the  South,  and  with  the  Virginia  trunk  lines,  is  the  com¬ 
parisons  in  Womble  Exhibit  No.  1200,  reproduced  on  the  next 
page,  showing  that,  taking  all  of  the  mileage,  main  lines  and 
branches,  of  the  Southern,  Atlantic  Coast  Line  and  Seaboard 
in  North  Carolina,  the  average  net  earnings  on  their  lines  in 
this  State  have  averaged  a  higher  percentage  of  their  average 
investment  per  mile  of  road,  for  a  ten-year  period,  than  that 
of  the  Chesapeake  and  Ohio,  Norfolk  and  Western,  and  Vir¬ 
ginian. 

Mr.  Plant  further  confirms  the  Womble  exhibits  in  his  sup¬ 
plementary  exhibit,  prepared  at  the  request  of  Commissioner 
Eastman,  and  filed  under  date  of  June  1,  1923. 


38 


N.  C.  Corporation  Commission  Exhibit  No.  1199 
I.  C.  C.  Docket  No.  13494 
W  itness :  Worn  ble 


STATEMENT  OF  OPERATING  REVENUES  AND  EXPENSES, 
WITH  AVERAGE  INVESTMENT,  FOR  TEN-YEAR  PERIOD 
(1912-1921),  OF  CHESAPEAKE  &  OHIO,  NORFOLK  &  WEST¬ 
ERN,  AND  VIRGINIAN  RAILWAYS,  FROM  ANNUAL  REPORTS 
TO  INTERSTATE  COMMERCE  COMMISSION 

CHESAPEAKE  AND  OHIO  LINES 


Year 

(See  Note) 

Miles 

Operated 

Operating 

Revenue 

Operating 

Expenses 

Net 

Operating 

Revenue 

Average 

Investment 

1912 _ 

2,263.10 

$  15,151.73 

$  10,002.07 

$  5,149.66 

1  96,310.89 

1913 _ 

2,319.00 

15,129.49 

10,544.01 

4,585.48 

95,353.32 

1914 _ 

2,345.80 

15,640.73 

10,936.11 

4,704.62 

102,037.47 

1915 _ 

2,369.20 

16,657.12 

11,631.11 

5,026.01 

105,476.53 

1916 _ 

2,378.67 

20,950.49 

13,746.62 

7,203.87 

108,241.67 

1917 _ 

2,412.10 

22,654.03 

15,797.77 

6,856.26 

118,710.37 

1918 _ 

2,479.70 

29,729.72 

21,809.71 

7,920.01 

120,567.92 

1919 _ 

2,506.00 

28,521.55 

24,212.48 

4,309.07 

126,942.72 

1920 _ 

2,519.20 

35,933.70 

31,700.18 

4,233.52 

127,680.23 

1921 _ 

2,545.87 

32,872.04 

26,161.22 

6,710.82 

134,141.55 

NORFOLK  AND  WESTERN  RAILWAY  CO. 


1912 _ 

2,010.23 

$  19,766.51 

$  12,769.40 

$  6,997.11 

$  108,554.32 

1913 _ 

2,022.85 

21,622.92 

14,121.57 

7,501.35 

112,317.84 

1914 _ 

2,035.91 

21,843.12 

14,703.91 

7,139.21 

118,738.09 

1915 _ 

2,041.95 

21,051.96 

13,630.02. 

7,421.94 

126,462.44 

1916 _ 

2,079.91 

28,582.96 

16,110.66 

12,472.30 

129,081.50 

1917 _ 

2,085.47 

31,604.50 

19,737.28 

11,867.22 

133,141.41 

1918 _ 

2,083.94 

39,350.48 

29,549.46 

9,801.02 

139,600.03 

1919 _ 

2,088.08 

36,840.35 

30,660.36 

6,179.99 

136,476.65 

1920 _ 

2,200.33 

40,216.40 

38,624.53 

1,591.87 

143,145.00 

1921 _ 

2,225.94 

36,281.57 

28,754.67 

7,526.90 

144,351.78 

VIRGINIAN  RAILWAY  CO. 


1912 _ 

474.60 

$  10,193.00 

$  6,261.68 

$  3,931.32 

$  176,126.51 

1913 _ 

491.13 

11,896.21 

6,870.19 

5,026.02 

179,446.13 

1914 _ 

503.03 

12,603.78 

7,023.88 

5,579.90 

180,336.21 

1915 _ 

503.59 

11,557.83 

6,705.56 

4,852.27 

185,140.62 

1916 _ 

507.57 

16,658.71 

8,454.80 

8,203.91 

185,144.90 

1917 _ 

512.62 

19,980.63 

11,117.13 

8,863.51 

187,513.18 

1918 _ 

518.56 

22,960.59 

17,891.69 

5,068.90 

189,510.47 

1919 _ 

522.90 

23,092.95 

17,546.38 

5,546.57 

192,193.86 

1920 _ 

523.57 

34,682.76 

24,655.69 

10,027.07 

208,179.71 

1921 _ 

526.09 

34,260.98 

23,581.00 

10,679.98 

216,201.10 

Note. — Data  shown  opposite  years  1912  to  1915  inclusive  is  that  for  years  ending  June  30th 
of  years  shewn. 


39 


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40 


This  supplementary  exhibit  shows  that,  comparing  the  main 
line  of  the  Southern  in  Virginia — Potomac  River  to  the  Vir¬ 
ginia-North  Carolina  State  line — with  the  main  line  across 
North  Carolina,  the  latter  mileage  exceeds  the  Virginia  mile¬ 
age  in  gross  revenue  $4,213  per  mile,  and  in  net  revenue  $197 
per  mile.  Here,  again,  Mr.  Plant's  trans-state  theories  are  out 
of  joint,  because  the  Virginia  main  line  mileage  gets  the  benefit 
of  a  larger  proportion  of  trans-state  traffic  than  its  North 
Carolina  mileage,  because  a  large  part  of  the  traffic  having 
origin  and  destination  in  North  Carolina  is  trans-state  across 
the  Virginia  main  line.  Potomac  yards  is  the  northern  ter¬ 
minus  through  which  its  all-rail  through  traffic  to  and  from 
eastern  trunk-line  territory  flows,  and  yet  its  North  Carolina 
main-line  traffic  exceeds  the  Virginia  main-line  traffic  bv 
$4,213  per  mile  of  road. 

Its  lines  in  Virginia  other  than  main  line  show  $10,221  gross 
and  net  (deficit)  $1,216,  against  $17,039  gross  and  $2,909  net 
for  lines  other  than  main  line  in  North  Carolina.  Comparing 
all  lines  in  Virginia  and  all  lines  in  North  Carolina,  we  have 
$23,301  gross  and  $4,935  net  in  Virginia  and  in  North  Carolina 
$24,343  gross  and  $5,945  net. 

Mr.  Plant  further  confirms,  rather  than  discredits,  the 
Womble  exhibits  of  superior  operating  conditions  and  revenues 
on  these  lines  in  North  Carolina  when  he  says  (p.  13337)  : 

“Our  lines  in  North  Carolina  are  funnels,  and  the  funnel 
opens  at  both  ends  beyond  the  State  line.  All  of  our  through 
traffic  from  every  direction,  from  North  to  South  and  South 
to  North,  and  in  many  respects  East  to  West,  passes  through 
North  Carolina." 

This  explanation  by  Mr.  Plant  gives  one  reason,  and  a  force¬ 
ful  one,  why  traffic  is  heavy  on  these  lines.  All  the  south¬ 
eastern  lines  that  reach  Florida  insist  in  this  very  proceeding 
that  the  absence  of  trans-state  traffic  in  Florida  necessitates 
higher  rates  over  their  lines  in  that  State.  If  the  absence  of 
trans-state  traffic  in  Florida  necessitates  higher  rates  in  that 
State,  why  should  not  the  presence  of  trans-state  traffic  in 
great  abundance  on  the  North  Carolina  lines  tend  to  lower 
rates  over  these  lines? 


41 


Indeed,  it  was  the  importance  in  volume  of  trans-state  traf¬ 
fic — the  flow  of  western  traffic  trans-state  through  the  port  of 
Norfolk,  and  the  flow  of  traffic  from  eastern  trunk  lines  over 
the  lines  reaching  Virginia  cities,  trans-state  to  the  South, 
which  gave  to  the  Virginia  cities  their  trunk-line  rates,  and 
it  is  this  flow  of  trans-state  traffic,  and  earnings  from  it,  which 
justifies  the  continuance  of  such  rates. 

But  trans-state  traffic  alone  does  not  explain  the  heavy* 
volume  of  traffic  on  the  North  Carolina  lines;  Womble  exhibits, 
1191  to  1197,  and  his  testimony  in  connection  with  these  ex¬ 
hibits,  show  that  the  heavy  traffic  on  these  lines  is  in  large 
part  explained  by  the  industrial  development  in  North  Caro¬ 
lina.  It  leads  all  other  States  of  the  South  in  hydro-electric 
power  developed  and  in  use ;  in  the  manufacture  of  textiles, 
furniture  and  tobacco.  It  has  more  units  of  electric  energv 

O  c 

driving  industries  than  has  been  developed  on  the  American 
side  of  Niagara  Falls,  and  more  than  the  projected  develop¬ 
ment  at  Mussel  Shoals,  including  the  completion  of  the  Wilson 
dam.  In  1919  there  was  an  investment  of  $916,039,159  in  in¬ 
dustrial  enterprises  in  North  Carolina,  not  including  cost  of 
power  developments  (Womble  Exhibit  No.  1194),  and  at  the 
present  time  this  would  exceed  a  billion  dollars.  It  needs  no 
argument  that  these  industries  furnish  more  than  an  average 
mileage  proportion  of  traffic  originating  and  terminating  in 
North  Carolina,  and  Mr.  Plant  (p.  13332-5)  would  not  say  that 
the  Southern  Railway  originates  as  much  freight  in  any  State 
in  which  it  operates  as  in  North  Carolina. 

An  analysis  of  the  exhibits  and  testimony  of  Mr.  Womble, 
and  of  Mr.  Pettijohn,  representing  the  Virginia  cities,  will  be 
convincing  that  the  great  industrial  development  in  this  State 
furnishes  these  lines  a  large  part  of  their  total  traffic,  with 
origin  and  destination  on  their  lines  in  this  State.  The  main 
line  of  the  Southern  Railway  across  the  State  runs  through 
the  center  of  this  industrial  development.  Of  the  395  cotton 
mills  in  this  State,  shown  on  Womble  Exhibit  1191,  128  of 
them  are  located  on  this  main  line  section  of  the  Southern  Rail¬ 
way,  an  average  of  one  cotton  mill  for  every  1.38  miles  of  its 
177  miles  of  track  between  the  State  lines.  The  furniture 


manufacturing  cities  of  High  Point,  Greensboro,  Thomasville 
and  Lexington,  with  their  nation-wide  distribution  of  furni¬ 
ture,  are  located  on  this  line.  Winston-Salem  and  Durham 
feed  a  large  proportion  of  their  manufactured  products  through 
this  main-line  stem.  The  Southern  has  nine  separate  lines 
branching  into  this  177  miles  of  main  line,  all  of  them  reach¬ 
ing  numerous  manufacturing  industries  and  feeding  their  traf¬ 
fic  into  this  177  miles  of  main  line  for  general  distribution. 

So  that  the  carriers’  position  is  not  only  untenable,  in  that 
it  proposes  to  apply  the  southeastern  level  of  rates  over  the 
trunk  lines  in  trunk-line  territory  for  the  greater  part  of  the 
distance,  in  constructing  through  rates  to  North  Carolina 
points,  but  their  position  gives  no  consideration  to  the  greatly 
superior  gross  and  net  earnings,  on  the  present  level  of  rates, 
of  the  lines  operating  south  of  the  gateways  for  their  short 
part  of  the  haul  to  these  destinations. 

Can  there  be  any  possible  justification  for  applying  the  flat 
southeastern  level  of  rates  over  the  main  line  of  the  Norfolk 
and  Western,  Cincinnati  to  Lynchburg,  and  over  this  main 
line  of  the  Southern,  Lynchburg  to  Greensboro,  in  making  the 
rate  Cincinnati  to  Greensboro? 

Can  there  be  justification  upon  any  sound  economic  basis 
for  an  increase  of  39  per  cent,  as  originally  proposed  (Womble 
Exhibit  1161)  or  of  44  per  cent,  as  now  proposed,  or  of  any  in¬ 
crease,  to  the  western  end  of  zone  one,  when  the  carriers  are 
making  the  largest  returns  on  the  present  basis  of  rates  which 
they  earn  on  any  of  their  lines  in  the  South? 

Comparing  main  line  with  main  line,  or  total  mileage  by 
States,  and  superiority  of  earnings  on  these  lines  in  North 
Carolina  is  shown. 

The  rates  originally  proposed  by  the  carriers  to  the  eastern 
half  of  zone  one  averaged  an  increase  of  49  per  cent  (Womble 
Exhibit  1161),  and  as  now  proposed  (conformed  to  Southern 
Traffic  League  per  cents,  without  reduction,  and  compared 
with  rates  now  in  effect)  average  an  increase  of  53.8  per  cent, 
and  their  rates  as  now  proposed,  after  all  the  changes  they 
have  made,  would,  if  adopted,  require  a  more  extensive  use 
of  an  alternative  rule  to  hold  them  down  to  the  level  of  full 


43 


combination  of  local  rates  than  is  indicated  with  respect  to 
their  original  proposals  by  the  Womble  exhibits  numbered 
1162  to  1167.  (This  phase  of  the  question  will  be  further  dis¬ 
cussed  in  connection  with  the  whole  western  adjustment.) 

CENTRAL  FREIGHT  ASSOCIATION  TERRITORY 

We  have  considered  at  perhaps  tedious  length  the  adjust¬ 
ment  proposed  by  the  carriers  from  Cincinnati  to  zone  one, 
not  alone  because  of  its  direct  importance,  but  because  of  its 
relation  to  other  more  important  adjustments. 

If  we  have  “made  out  a  case”  against  the  carriers’  pro¬ 
posals  from  Cincinnati — if  it  is  illogical  and  unjustifiable  to 
apply  the  southeastern  level  of  rates  over  the  trunk  lines  from 
Cincinnati  to  zone  one — the  proposals  of  the  carriers  from 
Central  Freight  Association  territory  to  zone  one — with  Cin¬ 
cinnati  and  Virginia  cities  increased  combinations  as  alterna¬ 
tive  maxima — is  even  more  so. 

Not  only  is  the  most  direct  of  the  southeastern  routes  cir- 
«/ 

♦ 

cuitous  from  Central  Freight  Association  territory  to  North 
Carolina  zone  one,  but  from  substantially  the  whole  of  Cen¬ 
tral  Freight  Association  territory  any  route  that  makes  through 
Cincinnati  is  circuitous. 

Before  getting  into  consideration  of  details  of  the  carriers’ 
proposals  from  Central  Freight  Association  territory,  it  will 
be  interesting  to  review  the  general  basis  upon  which  Mr.  L. 
E.  Olliphant,  representing  the  Central  Freight  Association 
lines,  testified  the  carriers’  proposals  were  worked  out.  In 
the  following  quotation  (pp.  2280-1-2)  the  questions  are  by 
Commissioner  Eastman  except  those  indicated  by  Mr.  Rhode- 
house  : 

“Mr.  Olliphant:  From  our  territory,  we  look  upon  the  South 
as  a  whole,  and  consider  the  Carolinas  in  the  same  light  as  we 
do  the  rest  of  the  South,  and  in  our  opinion  the  same  general 
methods  of  determining  our  through  joint  class  rates  should 
be  employed  as  to  the  southeast. 

“We  have  therefore  approached  the  Carolinas  from  the  view¬ 
point  of  establishing  through  joint  class  rates  in  the  same  man¬ 
ner  as  to  the  southeast,  namely,  using  the  Ohio  River  as  the 


44 


base,  and  I  have  previously  and  in  somewhat  detail  explained 
the  method  we  have  employed  in  determining1  the  through 
joint  rates  to  the  southeast. 

“Q.  Will  you  explain  why  you  use  the  Ohio  River  as  the 
base  instead  of  Virginia  cities?  Do  you  regard  the  Ohio  River 
crossings  as  the  gateways  to  Carolina  territory? 

‘‘A.  We  do,  particularly  from  a  rate-making  standpoint. 

“Q.  Would  they  be  regarded  as  the  gateways  to  Carolina 
territory  from  trunk-line  territory? 

‘‘A.  I  don’t  think  so.  You  mean  eastern  trunk-line  terri¬ 
tory,  Mr.  Commissioner? 

“Q.  How  would  traffic  ordinarily  move  from  Cleveland  to 
Carolina  territory? 

“A.  It  would  move  both  through  the  Virginia  cities  and 
through  Cincinnati. 

“Q.  Where  would  the  bulk  of  it  move? 

“A.  Probably  to  the  northern  zone  of  North  Carolina;  it 
would  move  through  the  Virginia  cities,  but  to  the  lower  Caro- 
linas  it  is  a  question. 

“Q.  (By  Mr.  Rhodehouse.)  From  the  Youngstown  terri¬ 
tory  to  the  Carolinas,  particularly  Zone  1,  would  not  that  busi¬ 
ness  move  normally  through  the  Virginia  cities? 

“A.  Yes,  sir;  to  Zone  1. 

“Q.  And  you  say  you  arrived  at  these  proposals  by  basing 
it  on  the  Ohio  River  from  Youngstown  and  Pittsburg? 

“A.  Except — I  am  coming  to  the  except  in  just  a  minute. 
We,  however,  are  confronted  with  somewhat  a  different  situ¬ 
ation  to  the  Carolinas  than  we  have  to  the  southeast,  bv  reason 
of  our  relatively  low  rates  from  Central  Freight  Association 
territory  to  the  Virginia  cities  and  the  fact  that  the  Virginia 
cities,  to  a  considerable  portion  of  the  Carolinas,  will  cut  in 
on  the  Ohio  River  adjustment.  Therefore,  in  constructing  our 
through  rates  to  the  Carolinas  we  have  used  the  Ohio  River  as 
the  base,  except  where  the  Virginia  cities  may  cut  in.” 

There  we  have,  frankly  stated,  the  general  basis  on  which 
the  carriers’  proposed  rates  from  Central  Freight  Association 
territory  to  North  Carolina  were  worked  out. 

It  will  be  helpful  in  consideration  of  the  situation  with  which 
we  are  here  dealing  to  refer  to  Womble’s  map,  Exhibit  No. 
1204,  which  for  convenient  reference  is  reproduced  in  dimin¬ 
ished  size  on  insert  page. 

From  this  map  it  will  be  seen  that  even  from  the  extreme 

northwestern  corner  of  Central  Freight  Association  territory 

1  «/ 


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(from  Chicago)  the  short-line  mileage  to  North  Carolina  points 
makes  considerably  north  of  Cincinnati,  and  that  from  Central 
Freight  Association  territory  east  of  Chicago  to  North  Caro¬ 
lina,  the  route  through  Cincinnati  is  more  circuitous  than  is 
the  route  of  the  Southern  Railway  through  Asheville  in  making 
rates  from  Cincinnati  to  zone  one,  and  that  from  more  than 
half  of  Central  Freight  Association  territory,  any  route 
through  Cincinnati  would  be  more  circuitous  than  the  Atlanta 
and  Augusta  routes  from  Cincinnati  to  zone  one.  And  of 
course  a  route  through  any  of  the  more  western  Ohio  River 
gateways — Louisville,  Evansville  or  Cairo — would  be  even 
more  circuitous. 

What  has  the  route  through  any  of  the  Ohio  River  gateways, 
logically,  to  do  with  the  making  of  rates  from  Central  Freight 

Association  territory  to  North  Carolina? 

«/ 

The  rates  from  Central  Freight  Association  territory  to  the 
southeast  and  Mississippi  Valley  naturally  and  logically  make 
through  Ohio  River  points,  for  they  make  the  direct  short-line 
routes. 

But  here  again  we  have  an  illustration,  and  a  more  striking 
one,  of  the  differentiation  of  the  rate  adjustment  to  points  in 
North  Carolina  from  that  to  the  southeast  and  Mississippi 
Valley. 

The  direct  route  from  all  points  in  Central  Freight  Associa¬ 
tion  territory,  except  the  small  corner  directly  west  of  Cin¬ 
cinnati  and  Louisville,  is  over  the  trunk  lines  to  the  Virginia 
gateways. 

Why  should  Mr.  Olliphant,  and  his  Central  Freight  Associa¬ 
tion  lines,  try  to  “look  at  North  Carolina”  from  Columbus, 
Cleveland,  Detroit,  Toledo,  Bay  City,  Grand  Rapids  or  Chicago 
“through  Ohio  River  crossings?”  Why  use  a  periscope  to  go 
around  the  bend  when  a  telescope  will  reach? 

Taking  the  nine  representative  points  in  Central  Freight 
Association  territory  selected  by  Mr.  Olliphant,  the  percentage 
of  circuit v  by  the  most  direct  of  the  Ohio  River  routes  Cin- 
cinnati  and  Asheville,  to  the  51  cities  and  towns  in  zone  one 
is  as  follows  (Womble  Exhibit  1205)  : 


46 


Bay  City _ 

Chicago _ 

Cleveland _ 

Dayton _ 

Detroit  _ 

Fort  Wayne  _ 
Grand  Rapids 
Indianapolis  _ 
Toledo _ 


.22.6  per  cent 

11.1  per  cent 

40.2  per  cent 

20.6  per  cent 

25.2  per  cent 
16.0  per  cent 

14.7  per  cent 
10.9  per  cent 

27.2  per  cent 


The  average  short-line  distance  is  763.9  miles;  the  average 
through  Cincinnati  and  Asheville  is  916.1  miles ;  average  cir¬ 
cuity,  Cincinnati-Asheville  route,  152.2  miles. 

The  distance  from  Columbus,  Ohio,  is  actually  7  miles  less 
to  Virginia  cities  and  to  North  Carolina  zone  one  than  the  dis¬ 
tance  from  Cincinnati  to  these  points.  Stations  intermediate 
to  Columbus  and  stations  east  of  Columbus  are  of  course  nearer 
to  Virginia  cities  and  zone  one  than  is  Cincinnati. 

Is  it  necessary  to  go  further  to  condemn  the  whole  basis  for 
the  Central  Freight  Association  territory-North  Carolina  ad¬ 
justment,  and  the  whole  superstructure  erected  thereon? 

Proceeding  upon  this  false  premise,  it  should  not  be  sur¬ 
prising  that  while  the  carriers  are  under  contract  to  submit 
“ through  rates  substantially  less  than  combination,”  their 
false  premise  leads  them  to  a  proposal  that  after  all  the  shift¬ 
ing  and  increasing  of  local  factors  their  adjustment  as  now 
proposed  necessitates  an  alternative  rule  to  eliminate  rates  to 
practically  every  railroad  station  in  North  Carolina  higher  than 
full  combination  of  local  rates  on  matched  classes  on  Virginia 
gateways. 

As  shown  in  the  first  part  of  this  brief,  in  reciting  the  his¬ 
tory  of  the  western  rates  to  North  Carolina,  these  rates  were 
formerly  on  basis  of  full  combination  of  local  rates.  In  the 
struggling  growth  and  development  in  this  State  this  basis  was 
found  to  be  intolerable,  and  the  carriers,  in  1914,  agreed  to  an 
adjustment  by  which  the  Southern  lines  put  into  effect  pro¬ 
portional  rates  south  of  Virginia  gateways  on  this  traffic.  That 
proportional  rate  is  now  70  cents  against  a  local  rate  of  90 
cents.  No  concession  was  made  at  that  time  by  Central  Freight 
Association  lines,  and  this  reduction  was  absorbed  bv  the  Caro- 
lina  lines. 


47 


In  the  process  of  time  the  Central  Freight  Association  lines 
are  now  likewise  proposing,  voluntarily,  to  join  in  through 
rates  to  the  southeast  and  Carolina  territory  substantially  less 
than  combination.  The  Central  Freight  Association  lines  are 
voluntarily  becoming  parties  to  the  construction  of  through 
rates  to  the  southeast  on  the  basis  of  56  per  cent  of  the  local 
rates  to  the  border  of  Central  Freight  Association  territory  at 
the  river,  the  natural  gateways  to  the  southeast  other  than 
North  Carolina. 


In  the  developing  process  of  liberalizing  through  rates  the 
Central  Freight  Association  lines,  as  well  as  the  Carolina  lines, 
have  become  committed  to  the  now  almost  universally  accepted 
principle  of  through  rates  “substantially  less  than  combina¬ 
tion.”  And  they  are  putting  this  principle  into  effect  from 
Central  Freight  Association  points  to  the  southeast  and  Mis¬ 
sissippi  Valley,  but  as  to  North  Carolina  they  begin  their  pro¬ 
posed  adjustment  by  first  increasing  the  local  rates  Virginia 
gateways  to  zone  one,  then  by  repealing  the  proportional  rate 
concession  which  the  Carolina  lines  accepted  in  1914  south  of 
the  Virginia  gateways;  by  proposing  to  cancel  the  Virginia 
cities  proper  rates  as  proportional  rates  through  Virginian 
Railway  junctions,  thereby  increasing  the  distance  under  the 
alternative  mileage  scale  from  85  to  104  miles  average,  and 
finally,  by  tying  our  adjustment  up  with  the  Ohio  River  ad¬ 
justment  to  the  southeast  except  where  the  Virginia  cities’ 
combination  of  full  increased  local  rates  cuts  into  it. 


It  should  not  be  surprising  that  this  method  of  approach — 
looking  at  North  Carolina  from  the  same  standpoint  as  the 
southeast,  through  Ohio  River  crossings — results  in  rates  which 
average  a  substantial  increase  of  the  present  unsatisfactory 
and  indefensible  adjustment,  as  shown  by  McKinstry  traffic 
tests,  which  is  in  fact  a  denial  to  the  shippers  of  North  Caro¬ 
lina  of  reasonable  and  just  through  rates  “substantially  less 
than  combination,”  and  which  requires  the  application  of  an 
alternative  rule  to  hold  the  rates  on  matched  classes  to  the  level 
of  full  combination  of  increased  local  rates.  Here,  also,  and 
again,  we  have  a  complete  ignoring  of  the  stipulation  of  the 
Commission,  in  its  order  for  this  general  investigation,  in  para- 


48 


graph  tAvo  of  said  order,  with  respect  to  rates  to  and  from 
Central  Freight  Association  territory,  “having  regard  to  the 
relationship  Avhich  rates  betAAreen  the  points  in  the  territories 
last  named  (Central  Freight  Association)  and  points  in  North 
Carolina  should  bear  to  rates  betAveen  the  same  points  and 
Richmond,  Norfolk,  Lynchburg,  Roanoke  and  other  points  in 
Virginia  known  as  Virginia  cities/’ 


RATES  HIGHER  THAN  COMBINATION 

There  has  been  much  discussion  in  testimony  of  the  relation 

*/ 

of  the  rates  proposed  by  carriers  to  North  Carolina  points  to 
the  combination  on  Virginia  cities.  Considerable  confusion  of 
this  phase  of  the  question  has  resulted  from  the  numerous 
changes  in  carriers'  proposals,  Avhich  haAre  been  preAuously 
mentioned,  and  we  desire  to  clear  up  this  part  of  the  record. 

First,  we  AATish  to  present  the  extent  to  which  rates  now  pro¬ 
posed  by  the  carriers  exceed  combination  of  factors  on  which 
through  rates  are  now  made  by  the  carriers.  These  factors 
are,  from  Central  Freight  Association  territory,  the  full  local 
rates  to  Virginia  cities,  and  the  proportional  rate  of  70  cents, 
south  of  Virginia  cities  to  zone  one.  The  local  rate  south  of 
Virginia  cities  is  90  cents,  so  that  C.  F.  A.  rates  to  zone  one 
now  are  only  20  cents  less  than  full  combination  of  strictly 
local  rates,  and  to  the  extent  that  carriers’  proposed  rates 
exceed  this  basis,  their  proposed  rates  represent  exactly  that 
amount  of  actual  increase  in  present  rates  on  matched  classes. 
Taking  the  representatrce  points  selected  by  Mr.  Olliphant, 
carriers’  proposed  rates  exceed  present  combinations  in  tiie 
amounts  on  each  class  set  out  hereAvith : 


To  All  Points  in  North  Carolina  Zone  One 


1 

2 

3 

4 

5 

6 

Bay  City _  .  .  _  _  _ 

24 

15H 

5 

23M 

14 1  o 
13 

27 

18  H 

23!^ 
23  H 

17 

Chicago  .  _  -  ______ _ _ 

15 

19 

19  " 
12 

Cleveland  -  __ _  _  _ 

10 

is  y2 
18 

Davton  _  _  _  _  „  _ 

19^ 

16 

13!  2 

m 

10 

17 

18  H 
15 

21  Yt 
19 

Detroit _ _ _  - _ 

17 

21 

Ft.  Wayne _  _  _  - _ _  _ 

15^ 

18 

15 

18 

18  H 
18 

22 

Grand  Rapids _  __  _  _ _ _ 

1  <> 1  2 
21 M 

5 

19 

24K2 
23 1  • 

22 

Indianapolis  _ _ -  -  _ _ 

2!) 

24 

23 

26 

Toledo _  _  _ _ _  _  _ 

11 

13  H 

isn 

12^ 

17 

49 


To  All  Points  in  North  Carolina  Zone  Two 


Bay  City _ _ _ _ _ __  _ 

25  *4 
8*4 

12 

2*4 

6 

23 

25*4 
17  *4 
16  *4 
12 

17*4 
10  *4 
10*4 
6  *4 

13 

23  *4 

18 

Chicago  _ _  _ -  .  _ _ _ 

11*4 

13 

Cleveland _  _ _ _  _  _ 

17*4 

14 

Dayton _ .  _  _ _ _ _  _ 

2 

6*4 

15 

Detroit _  _  ...  __  _ _ 

SSS 

INOOC 
»-H  CS 

11 

10 

20 

Ft.  Wayne _ _  .  . 

3 

11*4 

19 

16 

10 

17 

Grand  Rapids... _ _ _  _ 

12*4 

2*4 

7 

23 

15 

22 

Indianapolis..  _  _  _ 

8  *4 
12  *4 

11 

16*4 

17 

10 

17*4 

18 

Toledo _  _ _ _ _  _  .  _ _ 

13*4 

11 

To  All  Points  in  North  Carolina  Zone  Three 


Bay  City _  _  ..  _ _ _  ..  ..  _ _ . 

22 

11 

15 

15*4 

5*4 

6 

14*4 

5 

18 

Chicago. _  _ _  .  _  _ _  _ _ _ 

1 

1 

11 

Cleveland _  _  _  _  _  .. 

8*4 

5 

7*4 

3*4 

10 

12 

Dayton _  _  ...  _ 

2 

8*4 

Detroit  _  _  ...  _  .  _ 

14 

4*4 

9*4 

3*4 

12*4 

10*4 

6  *4 
12*4 

11*4 

7 

14 

Ft.  Wayne..  .  _  _ _ _  ...  _ ._ 

5 

6*4 

n*4 

Grand  Rapids _  ..  .  ...  -  ...  ...  .  - 

Indianapolis  _  _  .  _ _ _ _  .  _ 

15*4 

5 

11*4 

3 

16*4 

8*4 

Toledo  _ _ _  _  .  .  .  .  .  _  . 

9 

1 

6 

8 

12 

WHEN  IT  IS  CONSIDERED  THAT  THE  CARRIERS’ 
PROPOSED  RATES  WOULD  INCREASE  PRESENT  RATES 
TO  THE  EXTENT  SHOWN  ABOVE,  AND  THAT  THE  PRES¬ 
ENT  RATES  FROM  C.  F.  A.  ARE  ON  A  BASIS  OF  70  CENTS 
OVER  VIRGINIA  GATEWAYS  FOR  AVERAGE  HAUL 
SOUTH  OF  GATEWAYS  OF  85  MILES,  AND  THAT  THE 
COMMISSION  HAS  FIXED  A  DIFFERENTIAL  OF  60 
CENTS  (NOW  54  CENTS)  OVER  VIRGINIA  GATEWAYS 
FROM  EASTERN  TRUNK-LINE  POINTS  MAKING  OVER 
RICHMOND  AND  NORFOLK  FOR  AN  AVERAGE  DIS¬ 
TANCE  OF  158  MILES,  THERE  IS  PRESENTED  A  PIC¬ 
TURE  OF  THE  UNREASONABLENESS  OF  THE  CAR¬ 
RIERS’  WHOLE  SCHEME  OF  PROPOSED  RATES  TO 
NORTH  CAROLINA. 

Womble  Exhibits  Nos.  1162-67  were  inaccurate  to  the  ex¬ 
tent,  and  only  to  the  extent,  that  the  words  “combination  of 
‘local’  rates  on  Virginia  gateways”  was  used  in  the  heading. 
The  combination  used  in  making  up  that  series  of  exhibits 
was  the  full  local  rates  to  Virginia  cities  proper,  which  rates 
apply  as  published  proportional  rates  to  gateway  points  on 
the  Virginian  Railway,  plus  the  local  mileage  scale  south  of 
the  gateways.  These  Virginia  cities  rates  apply  both  as  local 
and  proportional  rates  to  Alta  Vista,  Suffolk  and  Norfolk,  on 
the  Virginian  Railway,  but  to  other  junction  points  on  that 


4 


50 


railway  the  local  rates  are  15  cents  higher.  This  was  fully 
.  explained  in  testimony  and  Exhibit  No.  1220%  was  presented, 
showing  that  if  Virginian  Railway  junctions,  to  which  Vir¬ 
ginia  cities  rates  apply  only  as  proportional  rates,  were  elimi¬ 
nated  from  consideration,  it  would  only  increase  the  average 
mileage  south  of  the  gateways  from  85  miles  to  104  miles. 

We  are  still  insisting  that  the  mileage  south  of  Virginian 
Railway  junctions  should  be  the  governing  mileage  in  con¬ 
sidering  the  level  of  rates  to  North  Carolina  points.  The  gen¬ 
eral  character  of  the  Virginian  Railway  is  well  known  as  one 
of  the  best  in  the  United  States.  Since  the  record  closed  in 
this  case  the  announcement  has  been  made  that  this  line  is  to 
be  electrified  at  a  cost  of  fifteen  million  dollars.  When  a  line 
of  the  operating  efficiency  of  the  Virginian  brings  traffic  to  the 
Carolina  lines  an  average  of  19  miles  nearer  to  these  North 
Carolina  cities,  this  difference  in  distance  should  be  consid¬ 
ered,  and  the  actual  service  performed  by  the  Carolina  lines 
for  the  North  Carolina  shipper  is  the  transportation  of  his 
freight  from  his  nearest  gateway. 

While  the  Womble  Exhibits  Nos.  1162-67  are  accurate  in 
every  respect  except  the  detail  explained,  these  exhibits  failed 
to  disclose  the  more  comprehensive  extent  to  which  carriers’ 
proposed  rates  exceeded  full  combination  of  local  rates,  in 
that  the  computations  shown  on  these  exhibits  dealt  only  with 
the  alternative  local  mileage  scale  applying  south  of  the  gate¬ 
ways,  whereas,  in  fact,  the  proposed  rates  in  many  cases  ex¬ 
ceeded  the  full  combination  over  Virginia  cities  proper,  using 
the  full  local  zone  rates  as  the  factors  south  of  the  gateways, 
and  in  this  way  carriers’  proposals  exceeded  full  combination 
of  local  rates  on  Virginia  cities  proper  to  all  cities  and  towns 
in  zones  one,  two  and  three,  to  the  extent  herewith  set  out : 


To  Zone  One  Points 


' 

1 

2 

3 

4 

5 

6 

Bay  City.. _ _  ..  _ _ _ _ 

4 

2^ 

6^ 

3  H 

9H 
3  Vi 
3 

5 

2H 

IVi 

3 

3 

Chicago _ _  _ _ _ _  _ 

Cleveland _ _  _  .  .  ..  _ 

Detroit-.- _  . .  . 

• 

Ft.  Wayne _ _ ----- .  .  . 

Grand  Rapids _  1 

,  ‘  , 

.4 

1 

Indianapolis -.  -  -  ..  . .  . . -  _ 

Toledo _  _ _  _  _ _ .1 _ _ i__ 

'  ♦  '  •  . 

f. 

-  f  * 

'  - 

** 

WOMBLiE  EXHIBIT  No.  1178 


STAUNTON 


(AYNCSBOAO 


LYNCHBU.fi 


Ml  >v  J-+ 


Al£H£NN/N 


v\l/\v£/tLr 


'Alta  vista 


Oi-K 


__l /jRGINjA 
North  Ca! 


£>an\/n-lc 


A/C  COAPO  RATION  CcfifjMAfS/OAL 
CXHIBIT  No. 

W/rxess  Wonblc 

f.C.C  Docket  No.  /3.4S+.  % 


GEO&XAPH/CA/.LV'  AcCOp/AT£  MaP 
/L  L  US  TEA  T/ NO  pJfTENT  TO  VYh/CH 
.Co  NS  TX  C/C  T/ON  OR  \E/£o/N/AN 

'Pa/ewat  Cor  Mileage  Between 
\Vjrgjn/a  Gate wat  and  Not^h 
)  Ca/Zo una  Points. 


/VJif'roxr  /V£ws 


51 


To  Zone  Two  Points 


Bay  City -  - 

Chicago  -  ...  .  _  _  _  _  _  __ 

5 

1 

3 

934 

134 

134 

634 

1134 

6 

534 

2 

8 

5 

10 

53 4 

6 

Cleveland..  .  .  ...  .  .  ....  ... _ 

Dayton  ...  _ _  _ _ _ _  _ 

Detroit _  ..  _ _  .  .  _ _ _ 

4 

2 

Ft.  Wayne  .  ______________ 

Grand  Rapids..  _  ..  __  _ _ _  ..  . 

7 

34 

1 

4 

Indianapolis.  _  ._ 

T  oledo 

To  Zone  Three  Points 


Bay  City _  .  .  ... _ 

634 

1 34 

3 

534 

3 

434 

9 

2 

3 

834 

5 

234 

7 

Chicago  .  .  ._  _  .... 

Cleveland  _ _  ... 

Dayton  _  _  _ _ _  _  _ _ _ 

2 

334 

Detroit  _ _ _ _ 

Ft.  Wayne  .  .  .  _ _ 

Grand  Rapids  .  .  __________ 

234 

134 

34 

Indianapolis.  ...  ...  _  ... 

Toledo  .  _ _ _  . 

3 

We  have  shown  on  preceding  pages  the  elaborate  extent  to 
which  carriers  are  now  proposing  to  change  factors  to  and 
from  the  Virginia  gateways  in  their  efforts  to  get  the  total  of 
these  factors  built  up  to  the  level  of  their  proposed  through 
rates. 

Conceding,  for  the  argument,  that  they  may  be  permitted 
to  make  all  these  proposed  changes  in  these  factors,  and  in¬ 
cluding  another  increase  in  the  local  rates  south  of  Virginia 
gateways  and  Virginia  cities,  which  rates  are  not  included  in 
this  proceeding,  their  proposed  through  rates  would  still  ex¬ 
ceed  full  combination  of  such  increased  rates  to  the  extent 
shown  herewith : 


To  Zone  One  Points 


i 

2 

3 

4 

5 

6 

1 

9 

534 

734 

dViipfl.frn  _  --  -  - 

2 

134 

134 

334 

l 

Cl r n n rl  Rani  Hr  _  _  _ _ _ - 

634 

3 

634 

134 

34 

134 

52 


To  Zone  Two  Points 


Bay  City _  _  _ _ - 

1 

9 

5  x 

7 

Chicago  -  -  .  _  _  _ . _ 

1 

1H 

1 

Cleveland  .  .  _ _ _ _  _ 

Detroit  _ _  _ _ 

3H 

1 

3  A 
A 
5  A 

1 

Ft.  Wayne _ _ 

Grand  Rapids..., _ _ .* _ 

3 

Indianapolis _  .  _  .  . 

Toledo.  _ _ _  _ 

A 

1 XA 

To  Zone  Three  Points 


Bay  City _ _ _ 

VA 

9'A 

6 

8 

1 

2 

4 

1 A 
6 

Chicago _  _ 

Cleveland..  .  _  .  _  _  _ 

A. 

4 

Ai 

5  A 

1 

Detroit _ _  .  _ _ _  _ _ _ _ 

lA 

Ft.  Wayne _ _ _  _  _ _ _  . 

Grand  Rapids _ _ _ _  _ 

3 

Indianapolis _ _  .  _ _ 

Toledo _  _  ..  _ 

2 

COMPARISON  OF  SPECIFIC  RATES  AND  MILEAGES 

Coming  back  to  the  stipulation  that  these  rates  should  be 
revised,  “having  regard  to  the  relationship”  between  rates 
from  C.  F.  A.  to  the  Virginia  cities,  we  invite  attention  to  a 
comparison  of  the  rates  and  mileages  to  Virginia  cities  and  of 
rates  and  mileages  to  North  Carolina  zone  one  cities.  From 
the  comparisons  set  out  below  it  will  be  seen  that  the  carriers 
are  proposing  rates  which  will  average  about  as  high  for  the 
average  haul  south  of  the  Virginia  gateways  of  85  miles  as 
the  rates  for  the  long  distances  to  the  Virginia  cities.  In  the 
proposed  rates  set  out  below,  the  proposed  rates  on  4th,  5th 
and  6th  classes  are  in  nearly  every  case  actually  higher  for 
the  85  miles  of  short  haul  than  for  the  long  haul  to  Virginia 
cities.  Taking  Grand  Rapids  as  the  extreme  illustration,  the 
average  distance  to  Virginia  cities,  803  miles,  is  nearly  ten 
times  as  great  as  the  average  distance  beyond  the  gateways 
to  zone  one,  and  yet  we  have  a  6th  class  rate  of  40 %  cents 
for  the  803  miles  and  46  cents  additional  for  the  85  miles. 
From  Detroit,  695  miles,  average  to  Virginia  cities,  the  4th 
class  rate  is  48%  against  58  additional  for  the  85  miles;  5th 
class  41  against  46%,  and  6th  class,  34  for  the  long  haul  against 
43%  cents  additional  for  the  additional  85  miles. 


53 


The  85  miles  of  haul  is  over  the  main  stems  of  these  Caro¬ 
lina  lines,  having  traffic  conditions  as  previously  shown,  which 
approximate  traffic  conditions  on  the  lines  in  trunk  line  ter¬ 
ritory. 

We  know  of  no  polite  way  in  which  condemnation  of  these 
proposed  rates  could  be  more  strongly  stated  than  by  this 
simple  comparison  of  rates  and  mileages,  which  follows: 


From  Bay  City,  Michigan 


1 

2 

3 

4 

5 

6 

To  Virginia  Gateways,  average  haul  786  miles..  _ _ 

Additional  to  Zone  1,  average  haul  85  miles . .  .  _ 

Total  through  rate  to  Zone  1 _ 

.122 

94 

co  n- 
o  c- 

80 

71 

55 

64 

4634 
50  34 

39 

47  34 

216 

18334 

151 

119 

97 

8634 

From  Cleveland 


To  Virginia  Gateways,  average  haul  602  miles.  . 
Additional  to  Zone  1,  average  haul  85  miles  .. 

Total  through  rate  to  Zone  1  ..  ..  .... 

10634 

8034 

93 

66 

70 

61 

48 

55 

4034 
43  34 

3334 

4134 

187 

159 

131 

103 

84 

75 

From  Detroit 

To  Virginia  Gateways,  average  haul  695  miles. ..  ... 
Additional  to  Zone  1,  average  haul  85  miles  ... 

Total  through  rate  to  Zone  1 _ ... 

108 

86 

94 

71 

70  34 
6534 

4834 

58 

41 

4634 

34 

4334 

194 

165 

136 

10634 

8734 

7734 

From  Grand  Rapids 

To  Virginia  Gateways,  average  haul  803  miles... 
Additional  to  Zone  1,  average  haul  85  miles ..  .  .  . 

Total  through  rate  to  Zone  1 -  ... 

12734 

8834 

11134 

72 

84 

67 

57  34 
6134 

49 

48 

4034 

46 

216 

18334 

151 

119 

97 

8634 

From  Pittsburg 

To  Virginia  Gateways,  average  haul  469  miles.. . 
Additional  to  Zone  1,  average  haul  85  miles  ...... 

Total  through  rate  to  Zone  1 ..  .  .  .  .  .  .  . 

10634 

6834 

93 

56 

70 

5234 

48 

4834 

4034 

3834 

3334 

3634 

175 

149 

12234 

96  34 

79 

70 

It  seems  conclusive  to  us  that  the  Commission  should  discard 
the  entire  scheme  of  rates  proposed  by  the  carriers  from  Cen¬ 
tral  Freight  Association  territory  to  North  Carolina,  and  that 
this  whole  scheme  of  rates  should  be  dealt  with  on  the  same 


54 


general  principles  employed  by  the  Commission  in  its  adjust¬ 
ment  of  rates  from  eastern  trunk-line  territory  to  North  Caro- 
lina  in  Dockets  10500-10515,  by  the  employment  of  differential 
factors  over  the  gateways  through  which  the  traffic  moves  and 

through  which  the  rates  logically  make  in  constructing  the 
through  rates. 

The  carriers  have  constructed  their  proposed  rates  upon 
premises  fatally  defective,  and  no  amount  of  tinkering  with 
their  proposals  can  conform  them  to  a  just  or  satisfactory 
adjustment. 

The  Commission  has  in  recent,  strongly-contested  and  well- 
considered  cases  set  the  precedent  on  both  sides  of  this  adjust¬ 
ment  that  should  govern  in  this. 

In  the  case  of  Johnson  City,  Tennessee  (64  I.  C.  C.  709), 
the  Commission  required  the  carriers  to  make  through  rates 
from  Central  Freight  Association  territory  to  Johnson  City 
on  a  differential  basis  of  30  cents  over  St,  Paul,  Virginia,  to 
which  the  same  proportional  rates  apply  as  through  Virginia 
cities.  The  distance,  Johnson  City  over  St.  Paul,  compares 
with  the  average  distance  to  the  51  cities  and  towns  in  zone 
one  over  the  Virginia  cities — 101  miles  to  Johnson  City  and 
104  miles  to  these  North  Carolina  cities,  if  the  distance  south 
of  the  gateways  is  to  be  measured  from  the  Virginia  cities 
proper.  The  average  distance  to  the  North  Carolina  zone  one 
cities  is  85  miles  if  measured  from  the  nearest  gateway  in 
each  case,  and  using  the  gateways  on  the  Virginian  Railway, 
to  which  Virginia  city  rates  now  apply  as  proportional  rates. 

From  the  whole  of  Eastern  Trunk  Line  territory  to  North 
Carolina  zone  one  points  rates  are  now  in  effect,  under  order 
of  the  Commission  in  Dockets  10500-10515,  on  a  differential 
basis  of  60  cents  first  class  (less  ten  per  cent,  July  1,  1922 — 
now  54  cents). 

To  our  sense  of  reasoning  this  basis  fits  in  with  the  differen¬ 
tial  from  Central  Freight  Association  territory  to  Johnson 
City,  Tenn.,  of  30  cents,  and  with  the  differential  basis  pro¬ 
posed  by  Mr.  Womble  of  30  cents,  and  points  the  way  to  the 
adjustment  that  should  be  made  from  Central  Freight  Asso¬ 
ciation  territory  to  zone  one. 

«/  # 


55 


The  differential  of  60  cents  from  eastern  trunk  lines  to  zone 
one  was  made  over  the  two  eastern  Virginia  cities  of  Richmond 
and  Norfolk.  The  other  Virginia  gateways  were  not  consid¬ 
ered,  and  had  no  bearing  on  that  adjustment  for  the  reason 
that  the  local  rates  from  Eastern  Trunk-Line  points  to  the 
western  Virginia  cities  of  Roanoke  and  Lynchburg  are  higher 
than  to  Richmond  and  Norfolk,  and  for  this  reason  Richmond 
and  Norfolk  are  the  rate-making  gateways  from  Eastern 
Trunk-Line  territory.  The  rates  from  Central  Freight  Asso¬ 
ciation  territory  apply  not  only  through  all  Virginia  cities 
proper,  but  also  through  the  nearer  gateways  on  the  Virginian 
Railway. 

The  average  distance  from  Richmond  to  the  51  cities  and. 
towns  in  zone  one  is  158  miles,  while  the  average  distance  to 
these  51  cities  and  towns  from  the  nearest  Virginia  gateway 
through  which  western  rates  apply  is  85  miles.  We  have  en¬ 
deavored  to  illustrate  this  point  on  the  next  page  in  a  way 
that  makes  it  entirely  clear. 

Returning,  for  a  moment,  to  the  unreasonableness  of  the 
carriers’  proposals,  Womble’s  Exhibit  No.  1210  shows  the  sub¬ 
stantial  extent  by  which  carriers’  proposals  exceed  the  60 
cents  differential  basis  adopted  by  the  Commission  in  Dockets 
10500-10515,  although  the  mileage  south  of  the  gateways  from 
Central  Freight  Association  territory  is  much  less  than  from 
Eastern  Trunk  Line  territory. 

Taking  New  York  as  representative  of  Eastern  Trunk  Line 
territory  and  Chicago  as  representative  of  Central  Freight  As¬ 
sociation  territory,  and  relating  the  factors  of  distance  and 
relations  of  rates  in  Official  and  Southern  territories,  would 
figure  a  differential  of  30  cents  from  Central  Freight  Associ¬ 
ation  territory  on  the  same  basis  that  would  figure  60  cents 
from  Eastern  Trunk-Line  territory.  This  formula  is  set  out 
in  Womble  Exhibit  No.  1211. 

Again,  a  differential  of  30  cents  is  arrived  at  in  the  method 
employed  by  Mr.  Womble  (Exhibit  No.  1209)  in  working  the 
general  basis  of  rates  set  out  as  his  proposal  of  rates  from 
Central  Freight  Association  territory  in  black  figures  on  this 
exhibit  and  numbered  8.  The  basis  used  by  Mr.  Womble  em- 


56 


ployed  the  Disque  Scale  for  the  total  average  distance  from 
points  of  origin  to  points  of  destination  in  zone  one.  There 
was  added  to  this  figure  an  increase  of  73  per  cent  for  the 
proportion  of  the  haul  south  of  the  gateways,  representing  the 
difference  in  level  of  the  Disque  Scale  and  the  carriers’  (Bar¬ 
ham)  proposed  standard  scale  for  the  southeast,  taking  this 
difference  at  the  end  of  the  Barham  Scale  at  460  miles. 

It  is  not  pretended  that  there  is  anything  peculiarly  sacred 
in  the  exact  figure  of  30  cents  proposed  by  Mr.  Womble.  The 
thing  that  we  are  asking  the  Commission  to  do  is  to  follow  its 
precedent  in  Dockets  10500-10515,  and  in  the  Johnson  City 
case,  and  after  consideration  of  all  the  important  elements 
and  differentiations  in  this  adjustment  to  fix  these  through 
rates  upon  or  with  relation  to  such  differential  relationship 
through  all  the  Virginia  gateways  as  it  finds  to  be  proper. 
But  every  reasonable  precedent  which  we  find  seems  to  sus¬ 
tain  as  reasonable  the  30  cents  differential  basis  proposed  by 
Mr.  Womble  as  a  differential  on  first  class,  with  other  classes 
run  out  on  the  Southern  Traffic  League  (Ryan)  per  cents, 
which  have  now  been  accepted  by  the  carriers. 

The  carriers  are  in  this  case  proposing  rates  from  St.  Louis, 
Mo.,  to  the  southeast  and  Carolinas,  made  a  differential  of  30 
cents,  first  class,  higher  than  Cairo  for  a  distance  of  155  miles. 

The  Commission  fixed  in  39  I.  C.  C.  224-244,  a  differential  on 
first  class  of  20  cents  for  a  distance  not  exceeding  300  miles 
south  of  Memphis. 

In  61  I.  C.  C.  336,  the  Commission  fixed  the  first-class  differ¬ 
ential  of  15  cents  for  a  distance  of  88  miles,  Macon  over  At¬ 
lanta,  and  in  the  same  case  the  differential  on  first  class  of 
28  cents  for  171  miles,  Augusta  over  Atlanta. 

Within  the  southeast  and  Mississippi  Valley  the  carriers  are 
at  this  time  nowhere  proposing  a  zone  adjustment  carrying  an 
advance  over  an  adjoining  intermediate  zone  as  great  as  30 
cents  for  an  average  of  either  85  or  104  miles  of  greater  dis¬ 
tance.  Fifteen  cents  is  the  greatest  amount  of  such  increase 
shown  at  any  point  of  their  proposals  for  the  whole  southeast 
and  in  the  Valley,  and  where  this  much  of  advance  is  made  it 


UHnC  hb^r<j 


’WAp  ILLUSTRATING  the  shorter  average  haul  on  traffic 
FROM  CENTRAL  FREIGHT  ASSOCIATION  AND  PITTSBURG  TER¬ 
RITORIES  (BLACK  LINES),  MAKING  THROUGH  ALL  VIRGINIA 
GATEWAYS,  TO  ZONE  1  POINTS  IN  NORTH  CAROLINA,  COMPARE!* 
WITH  AVERAGE  HAUL  SOUTH  OF  RICHMOND  AND  NORFOLK  IO 
SAME  POINTS  ON  TRAFFIC  FROM  EASTERN  TRUNK  LINE  TERRI¬ 
TORY  (RED  LINES) 


f?lc.htnoneL/ 


d kldoiv 


rr 


un 


c>£ 


Kboro 


r'(JcJ 


H 


■  ' 

.  • 


' 


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5  IAU  iVf\;  ? 


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.  ■ 


•  :  W  -  <  >;  ■  HfiV/ 


T  /  J  /'  r  V  Ji  .V-  5  '  C/,H 


57 


is  usually  for  a  greater  average  increase  in  distance  than  that 
under  consideration  here. 

It  is  also  worthy  of  comment  that  the  whole  proposed  ad¬ 
justment  in  the  southeast  and  in  the  valley  makes  no  discrimi¬ 
nation  on  account  of  two  or  more  line  hauls. 

Five  of  the  51  cities  and  towns  in  zone  one,  shown  in  Mr. 
Womble’s  exhibits,  are  reached  by  the  Norfolk  and  Western’s 
single  line  from  Cincinnati  and  Columbus — Madison,  Mayo- 
dan,  Winston-Salem,  Roxboro  and  Durham.  All  but  one  of 
the  others  (Leaksville)  is  reached  by  single  line  south  of  Vir¬ 
ginia  gateways,  a  majority  of  remainder  are  reached  by  main 
line  single  haul  south  of  Virginia  gateways. 

BUFFALO-PITTSBURG 

The  history  of  the  Buffalo-Pittsburg  rates  to  North  Caro¬ 
lina  has  been  so  recently  reviewed  by  the  Commission  that  it 
seems  barely  necessary  to  restate  it. 

It  will  be  recalled  that  the  original  order  in  this  case  pre¬ 
scribed  a  uniform  differential  of  30  cents  first  class  over  Rich¬ 
mond  and  Norfolk  to  Zone  1  from  the  whole  of  Eastern  Trunk- 
Line  territory,  including  Buffalo-Pittsburg  groups.  Upon  peti¬ 
tion  of  the  carriers  the  case  was  reopened  and  reargued,  and 
in  the  final  decision  of  the  Commission,  now  in  effect,  this 
whole' adjustment  of  rates  was  put  on  a  basis  of  60  cents  as  a 
maximum  differential,  instead  of  30  cents  as  found  to  be  rea¬ 
sonable  in  the  original  order.  Inasmuch  as  the  carriers  are 
still  resisting  the  reconsidered  and  liberalized  order  of  the 
Commission  with  respect  to  these  rates,  the  reasons  which  they 
assign  for  this  persistence  should  receive  the  closest  scrutiny. 

Let’s  examine  the  reasons  given  by  the  carriers  for  con¬ 
tinuing  over  into  this  proceeding  their  long-continued  contests 
over  these  rates. 

Mr.  J.  W.  Perrin,  presenting  the  testimony  for  the  carriers, 
set  out  four  general  reasons : 

1.  Classification  differences. 

2.  Low  rates  and  abnormal  relation  of  classes  Pittsburg  to 
Virginia  cities. 


58 


3.  Present  adjustment  from  Pittsburg  does  not  line  up  with 
rates  carriers  now  propose  from  related  territory  in  Central 
Freight  Association  territory. 

4.  Higher  rates  from  Pittsburg  necessary  to  keep  open  cir¬ 
cuitous  routes  if  proposed  increased  rates  from  points  on  such 
circuitous  routes  are  approved. 

We  will  quote  at  some  length  Mr.  Perrin’s  own  frank  state¬ 
ment  of  these  reasons : 

“I  have  referred  previously  to  the  more  satisfactory  rates 
obtained  from  Baltimore,  Philadelphia,  and  New  York  under 
a  basis  of  differentials  over  the  rates  to  Virginia  cities  because 
of  the  application  of  the  Southern  Classification  to  both  fac¬ 
tors.  But  in  the  case  of  Pittsburgh,  removed  from  the  influ¬ 
ence  of  the  fourth  section,  which  applied  at  interior  Eastern 
points,  and  having  such  an  abnormal  relationship  between 
classes  to  Virginia  cities,  no  consistent  through  rates  can  be 
obtained  under  the  basis  of  differentials  added  to  the  rates  to 
Virginia  cities.” 

•  •••••• 

“Q.  And  how  were  the  rates  from  Boston  to  North  Carolina 
constructed  with  respect  to  the  through  rates  that  you  made 
from  New  York? 

“A.  The  rates  from  Boston  to  Virginia  cities  are  governed 
by  the  Official  Classification,  but  that  was  entirely  discarded 
in  making  the  rates,  because  we  preserved  the  port  relationship 
between  New  York  and  Boston;  therefore,  the  question  of. using 
Official  Classification  down  to  the  Virginia  cities  as  a  factor  in 
making  the  through  rates  did  not  have  any  effect. 

“Q.  And  when  you  swing  around  to  Pittsburgh,  the  rates 
to  the  Virginia  cities  are  governed  by  Official  Classification, 
and  where  you  have  a  class  percentage  relationship,  Pittsburgh 
to  the  Virginia  cities,  very  different  from  the  relationship 
South,  then  you  get  into  difficulties  when  you  undertake  to 
add  differentials  south  of  the  Virginia  cities  governed  by  the 
Southern,  to  the  trunk-line  rates  from  Pittsburgh  to  the  Vir¬ 
ginia  cities  governed  by  the  Official  Classification? 

“A.  Yes,  sir;  and,  as  I  have  previously  stated,  the  relation¬ 
ship  between  the  classes  from  Pittsburgh  to  the  Virginia  cities 
was  very  abnormal  in  itself.  It  is  the  lowest  that  we  have  been 
able  to  find. 

“We  are  of  the  opinion  that,  inasmuch  as  lines  leading  west 
from  Buffalo-Pittsburgh,  as  well  as  lines  leading  east  from 


59 


these  points,  compete  for  traffic  to  Carolina  territory,  and  in¬ 
asmuch  as  the-  short-line  distances  are  in  some  cases  via  the 
Western  routes,  and  in  some  cases  via  the  Eastern  routes,  some 
consideration  should  be  given  to  the  proposed  joint  through 
rates  from  Central  Freight  Association  in  fixing  the  rates  from 
Buffalo  and  Pittsburgh. 

“Mv  exhibit  No.  431,  filed  when  I  was  previously  on  the 
stand,  I  show  in  there  the  present  and  proposed  rates  from 
Pittsburgh  and  Buffalo,  and  the  proposed  rates  from  Youngls- 
town,  Cleveland  and  Canton,  Ohio,  to  representative  North 
Carolina  and  South  Carolina  points,  and  from  that  exhibit  an 
idea  may  be  had  of  the  proposed  relationship  in  the  rates  from 
Pittsburgh  and  say  Cleveland,  Ohio,  which  is  perhaps  tlie  most 
representative  point  in  the  group  of  Central  Freight  Associa¬ 
tion  points  adjacent  to  the  Pittsburgh  group. 

“The  idea  is  that,  distance  considered,  there  should  not  be 
marked  differences  in  the  rates  from  Pittsburgh  and  Cleve¬ 
land.  The  distance  from  Cleveland  to  Greensboro,  N.  C.,  is  37 
miles  greater  than  from  Pittsburgh,  and  the  proposed  revision 
of  the  rates  from  Pittsburgh  would  make  the  difference  on 
first-class  12  cents  in  favor  of  Pittsburgh.  The  same  difference 
in  rates  will  apply  to  Fayetteville,  N.  C.,  where  Pittsburgh  is 
99  miles  nearer  than  Cleveland ;  and  at  Charlotte,  N.  C.,  where 
Pittsburgh  is  40  miles  nearer  than  Cleveland ;  and  at  Florence, 
S.  C.,  where  the  difference  is  63  miles  in  favor  of  Pittsburgh ; 
and  at  Orangeburgh,  S.  C.,  where  the  distance  is  31  miles  in 
favor  of  Pittsburgh.  To  Columbia,  S.  C.,  the  rates  from  Pitts¬ 
burgh  and  Cleveland  would  be  the  same,  there  being  a  differ¬ 
ence  in  distance  of  only  four  miles  in  favor  of  Cleveland ;  to 
Spartanburg  the  Cleveland  distance  is  26  miles  less  than  the 
Pittsburgh  difference,  and  there  should  be  a  difference  of  four 
cents  in  rates.  At  Denmark,  S.  C.,  the  distance  from  Pitts¬ 
burgh  is  13  miles  less  than  from  Cleveland,  Ohio,  while  the 
difference  in  rate  proposed  is  one  cent.  At  Charleston,  S.  C., 
the  difference  in  distance  is  63  miles  in  favor  of  Pittsburgh, 
while  the  difference  in  rate  as  proposed  is  12  cents  first-class. 

“It  seems  manifest  that  the  existing  rates  from  Pittsburgh 
would  be  discriminatory  against  the  proposed  rates  from  Cleve¬ 
land,  especially  to  points  in  the  Carolinas,  to  which  the  short- 
line  distances  from  Cleveland  are  less  than  or  approximately 
the  same  as  the  distances  from  Pittsburgh. 

“Q.  Taking  Greensboro  for  example,  the  present  rate  from 
Pittsburgh  to  Greensboro,  as  shown  by  your  exhibit  No.  431, 
is  $1.70.  The  proposed  rate  from  Cleveland  to  Greensboro  is 
$1.87.  In  other  words,  if  you  were  compelled  to  hold  the  pres- 


60 


ent  rate  from  Pittsburgh  to  Greensboro,  and  should  be  permit¬ 
ted  to  establish  the  proposed  rate  from  Cleveland  to  Greens¬ 
boro,  you  would  have  a  rate  from  Cleveland  to  Greensboro  17 
cents  higher  than  the  rate  from  Pittsburgh? 

“A.  ■  Yes,  sir.  Now,  so  far  as  the  relationship  between 
points  of  origin  is  concerned,  the  change  of  5  cents  per  100 
pounds  is  merely  for  the  purpose  of  more  nearly  relating  the 
rates  from  Pittsburgh  and  Cleveland  and  adjacent  points  into 
the  Carolina  territory. 

“Q.  You  have  dealt  with  Cleveland  in  the  illustration  which 
you  give  as  typical? 

“A.  Yes,  sir. 

“What  is  said  as  to  Cleveland  indicates  that  the  present 
rates  from  Pittsburgh  would  not  be  properly  comparable  with 
the  proposed  rates  from  Toledo,  Columbus,  Detroit,  and  the 
other  points  in  that  section  of  Central  Freight  Association  ter¬ 
ritory  from  which  the  distances  approximate  the  distance  from 
Cleveland.  The  revision  proposed  from  these  Central  Freight 
Association  points  and  from  Pittsburgh  should  establish  a  rea¬ 
sonable  relationship  between  them  and  Pittsburgh.” 

Analyzing  these  reasons  separately : 

1st.  Classification  differences.  After  following  pretty  closely 
the  building-up  of  this  record  of  twenty  thousand  pages,  the 
opinion  is  hazarded  that  no  point  in  it  has  been  more  over¬ 
worked  and  overstressed  than  the  point  of  differences  in  classi¬ 
fication  in  rates  to  Virginia  cities  and  North  Carolina  cities 
with  respect  to  all  these  adjustments  —  Ohio  River,  Central 
Freight  Association  territory,  and  Buffalo-Pittsburgh. 

We  are  dealing,  and  can  only  deal,  with  general  levels  of 
rates.  Because  classification  differences  theoretically  make 
unequal  rates  as  between  Virginia  and  North  Carolina  cities 
on  some  particular  article  which  may  not  move  from  Pitts¬ 
burgh,  is  no  logical  reason  for  making  an  unreasonable  adjust¬ 
ment  of  rates  on  all  classes,  Pittsburgh  to  North  Carolina,  and 
which  would  not,  after  it  was  made,  adjust  an  unreasonable 
classification  difference. 

Wide  differences  in  the  classification  of  particular  articles 
cannot  be  remedied  by  raising  or  lowering  the  general  level  of 
rate  schedules  on  all  classes. 

There  are  variations  in  each  classification  more  favorable 
and  less  favorable  to  the  shipper.  To  undertake  to  equalize 


61 


rates  on  articles  more  favorable  to  the  shipper  under  one 
classification  by  increasing  rates  on  all  classes  intensifies  the 
disadvantage  of  the  shipper  on  articles  rated  less  favorably  in 
his  classification,  and  is  no  remedy  for  the  trouble  aimed  at. 
Increasing  or  decreasing  a  rate  schedule  10  cents  per  100 
pounds,  first-class,  does  not  equalize  rates  on  an  article  rated 
first-class  in  one  classification  and  three  times  first-class  in 
another. 

Results  that  appear  to  be  absurd  can  be  pointed  out  under 
any  rate  schedules  in  a  like  situation  where  two  classifications 
are  involved;  for  illustration,  the  admission  by  Mr.  Olliphant 
that  under  the  rates  as  proposed  by  the  carriers,  the  actual 
freight  charge  on  some  articles  will  be  less  from  Detroit  to 
Jacksonville,  Fla.,  than  from  Detroit  to  Cincinnati.  By  the 
time  you  could  get  a  schedule  of  rates  to  Jacksonville  high 
enough  to  remedy  the  extremes  of  that  situation,  you  might 
be  shipping  pig-iron  by  parcel  post,  with  postage  stamps  on 
each  “pig.” 

The  persistent  tendency  is  for  classification  ratings  to  come 
nearer  together,  as  shown  by  testimony  of  J.  T.  Ryan  and  his 
exhibit  No.  1225,  and  when  differences  in  percentage  relation 
of  classes  in  rate  schedules  are  considered,  the  differences  in 
classification  ratings,  on  articles  that  actually  move  in  worth¬ 
while  quantities,  across  classification  boundaries,  is  much  less 
significant  than  all  the  carrier  witnesses  who  have  attempted 
to  justify  proposed  rates  to  North  Carolina  have  undertaken 
to  show. 

Take  the  point  so  much  stressed  by  carrier  witnesses,  that 
there  are  1,057  articles  rated  sixth-class  in  Southern  Classifica¬ 
tion  that  are  rated  fifth-class  in  Official.  Butfcthe  sixth-class 
percentage  of  the  first-class  rate  is  higher  even  in  the  revised 
Southern  Traffic  League  per  cents,  now  accepted  by  the  car¬ 
riers,  than  the  fifth-class  percentage  of  the  first-class  rates  in 
trunk-line  territory.  So  that,  these  differences  in  classification 
are,  after  all,  in  the  nature  of  equalizing  differences  in  rate 
structures. 

Notwithstanding  the  much  more  favorable  percentage  rela¬ 
tionships  employed  in  Official  territory  than  in  Southern  terri- 


62 


tory,  there  are  a  great  many  articles  more  favorably  rated  in 
Official  than  in  Southern,  and  any  effort  to  equalize  classifica¬ 
tion  ratings  by  general  levels  of  class-rate  schedules  intensifies 
inequalities  of  this  kind,  without  giving  any  remedy  in  many 
cases  where  more  favorable  ratings  obtain  in  Official.  The 
Southern  carriers  have  a  classification  committee  in  continuous 
session  revising  classification  ratings,  and  it  may  be  depended 
upon  that  they  are  looking  out  for  ratings  in  Southern  Classifi¬ 
cation  that  give  reasonable  revenue  on  articles  that  move  in 
substantial  volume,  and  if  any  absurd  situations  develop  from 
the  establishment  of  reasonable  and  reasonably  related  rate 
schedules,  they  should  be  adjusted  by  fitting  the  classification 
rating  to  such  reasonable  rate  schedules,  and  not  by  fixing  rate 
schedules  to  take  care  of  absurdities  and  oddities  in  classifica¬ 
tion  ratings. 

2d.  Low  rates  Pittsburgh  to  Virginia  cities,  and  “abnormal” 
relations  between  classes  Pittsburgh  to  Virginia  cities. 

It’s  a  peculiar  argument  that  rates  to  North  Carolina  points, 
through  Virginia  cities,  ought  to  be  increased  because  the  local 
rates  to  the  Virginia  cities  are  so  low.  If  rates  to  the  Virginia 
cities  were  higher,  or  if  it  were  proposed  to  make  them  higher, 
it  might  logically  be  urged  that  rates  to  North  Carolina  points, 
making  through  Virginia  cities,  might  be  higher,  but  the  force 
of  logic  becomes  exhausted  when  it  is  employed  in  the  reverse 
direction. 

It  does,  indeed,  seem  a  pity  to  take  even  the  crutch  from  so 
infirm  an  argument ;  but  here,  again,  the  facts  do  not  support 
the  premise  on  which  it  is  so  poorly  based.  There  has  been 
much  discussion  in  this  record  of  the  level  of  rates  to  Virginia 
cities,  so  often  stressed  as  “depressed.”  The  Womble  exhibit, 
No.  1177,  shows  the  average  level  of  rates  from  the  ten  repre¬ 
sentative  Central  Freight  Association  points  to  Virginia  cities 
to  be  higher  than  the  Disque  Scale  A  by  between  three  and 
four  per  cent.  The  comparison  set  out  on  the  next  page  shows 
the  Pittsburgh-Virginia  cities  rates  to  exceed  the  Disque  A 
scale  by  7.28  per  cent.  So  that,  clearly,  the  Pittsburgh-Vir¬ 
ginia  cities  rates  are  now  above  the  average  level  of  rates  in 

trunk-line  •  territory.  ■  ,  •  < 

«/ 


63 


COMPARISON  OF  PRESENT  RATES  WITH  BISQUE 


“A”  SCALE 


FROM  PITTSBURG,  PA. 


TO 


MILES 


Roanoke,  Va - 456  {  Disqu^ 

Lynchburg,  Va - 448  {  Disq^ 

Alta  Vista,  Va - 471  j  Disque 

Brookneal,  Va . 482  { 

Meherrin,  Va . ..483  { 

Alberta,  Va - 479  { 

Richmond,  Va - 418  {  Disqu^ 

Petersburg,  Va . -441  {  ^que* 

Jarratt,  Va . ....475  {  nitque 

Suffolk,  Va . «00{gS^ 

Norfolk,  Va - 503  { 


PER  100  POUNDS 


118.5 

107.0 

118.5 

107.0 

118.5 

108.5 

118.5 

111.5 

118.5 

111.5 

118.5 

108.5 

118.5 
102.0 

118.5 

107.0 

118.5 

108.5 

118.5 

111.5 

118.5 

112.5 


103.5 

91.0 

103.5 

91.0 

103.5 

92.0 

103.5 

95.0 

103.5 

95.0 

103.5 

92.0 

103.5 

86.5 

103.5 

91.0 

103.5 

92.0 

103  5 
95.0 

103.5 

95.5 


78.0 

71.5 

78.0 

71.5 

78.0 

72.5 

78.0 

74.5 

78.0 

74.5 

78.0 

72.5 

78.0 

68.5 

78.0 

71.5 

78.0 

72.5 

78.0 

74.5 

78.0 

75.5 


33.5 

53.5 

33.5 

53.5 

33.5 

54.5 

33.5 
56.0 

33.5 

56.0 

33.5 

54.5 

33.5 
51.0 

33.5 

53.5 

33.5 

54.5 

33.5 
56.0 

33.5 

56.5 


45.5 

37.5 

45.5 

37.5 

45.5 
38.0 

45.5 

39.0 

45.5 

39.0 

45.5 

38.0 

45.5 

35.5 

45.5 

37.5 

45.5 
38.0 

45.5 

39.0 

45.5 

39.5 


37.5 

30.0 

37.5 

30.0 

37.5 

30.5 

37.5 
31.0 

37.5 

31.0 

37.5 

30.5 

37.5 

28.5 

37.5 
30.0 

37.5 

30.5 

37.5 
31.0 

37.5 

31.5 


Total 

Present 

Rates 


416)4 


416)4 


416)4 

416)4 

416)4 

416)4 

416)4 

416)4 

416)4 

416)4 

416)4 


Total 
Disque 
“A”  Scale 


390)4 

390)4 

396 

407 

407 

396 

372 

390)4 

396 

407 

411 


4681)4 


4363)4 


7.28%  higher  than  Disque  Scale. 


64 


We  have  confidently  presented  the  contention  in  this  case 
that  the  rates  from  Pittsburgh  to  Virginia  cities  proper  are 
relatively  high  rates.  It  will  be  helpful,  in  considering  this 
phase  of  the  question,  to  refer  to  Woinble  exhibit  No.  1214, 
which,  for  convenient  reference,  we  are  reproducing  in  dimin¬ 
ished  size  on  next  insert  page.  Having  in  mind  that  the  rates 
from  Pittsburgh  to  Virginia  cities  are  30  cents  first-class  (June 
30th)  higher  than  from  New  York,  and  precisely  the  same  on 
every  class  as  from  Cleveland  and  Buffalo,  it  will  be  seen  at  a 
glance  that,  with  relation  to  rates  from  important  cities  beyond 
Pittsburgh,  the  Pittsburgh-Virginia  cities  rates  are  high,  and, 
upon  the  principle  of  relativity,  a  strong  case  could  be  pre¬ 
sented  for  a  reduction  in  the  rates  from  Pittsburgh  to  Virginia 
cities. 

But  it  seems  to  us  the  point  of  anchorage  in  this  adjustment 
is  that  the  Virginia-cities  adjustment  is  a  stable  adjustment. 
It  has  endured  and  will  no  doubt  continue  to  endure,  and  it 
ought  to  fix  the  basis  for  rates  making  through  the  Virginia 
cities,  just  as  rates  to  Ohio  River  points  fix  the  basis  of  through 
rates  making  through  those  gateways.  If  the  rates  from 
Buffalo  and  Cleveland  to  Virginia  cities  are  the  same  as  from 
Pittsburgh,  the  rates  making  on  Virginia  cities  to  near-by 
points  beyond  ought  to  be  the  same.  But  in  no  event  is  there 
foundation  for  the  contention  that  Pittsburgh-Virginia  cities 
rates  are  abnormally  low  for  trunk-line  territory  and  do  not 
for  that  reason  furnish  a  proper  basis  for  construction  of 
through  rates. 

3d.  That  present  rates  Pittsburgh  to  North  Carolina  do  not 
line  up  with  rates  now  proposed  by  the  carriers  from  related 
Central  Freight  Association  territory. 

Here  is  the  real  meat  in  the  Pittsburgh  cocoanut ;  and  here, 
again,  we  insist  that  the  argument  has  been  reversed.  Having 
proposed  rates  from  Central  Freight  Association  territory  to 
North  Carolina  upon  a  basis  that 'is  fallacious  and  illogical, 
they  find  that  their  proposed  rates  from  Eastern  Central 
Freight  Association  points  could  not  stand  up  unless  there  can 
be  a  readjustment  of  rates  from  Pittsburgh  and  Buffalo.  That 


WOMBJjE  EXHIBIT  No.  1214 


mm 


- 


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•  .  .:  '  •-,  •-  ■'  '  ■  :-'  .  •  "‘. N  : ' 


as**1 


.*  a^fei  wmkiihh1  ftm  n  »KWiiUi<i»  »  ■  - 

•  • 


v-ma-t 


65 


does  not  argue  that  their  Pittsburgh  rates  are  wrong,  but  that 

their  proposed  rates  from  Central  Freight  Association  terri¬ 
tory  are  wrong.  Their  proposed  rates  from  Central  Freight 
Association  territory  are  condemned  by  the  tried-out  and  lib¬ 
eralized  findings  of  the  Commission  as  to  their  rates  from  Pitts¬ 
burgh. 

Their  proposed  rates  from  Central  Freight  Association  terri¬ 
tory  are  not  in  line  with  present  rates  from  Pittsburgh.  Our 
disagreement  with  the  carriers  at  this  point,  however,  goes 
further  than  a  mere  contention  that  their  proposed  rates  from 
Central  Freight  Association  territory  should  be  revised  to  the 
level  of  the  present  rates  from  Pittsburgh,  instead  of  increas¬ 
ing  the  Pittsburgh  rates  to  line  up  with  the  proposed  rates 
from  Central  Freight  Association  territory.  Our  contention  is 
that  the  present  level  of  Pittsburgh  rates  to  North  Carolina  . 
points  is  too  high,  because  they  are  on  the  same  differential 
basis  as  Eastern  trunk-line  rates,  which  make  only  through 
Richmond  and  Norfolk,  averaging  158  miles  distance  from  the 
51  cities  in  zone  one,  whereas  Pittsburgh  rates  make  the  same 
to  and  through  all  Virginia  cities,  and  also  through  all  the 
gateways  on  the  Virginian  Railway,  averaging  only  85  miles 
distance  from  these  same  51  cities. 

The  carriers  insisted  upon  bringing  the  Buffalo-Pittsburgh 
rates,  recently  determined  in  Dockets  10500-10515,  into  this 
general  investigation.  We  agree  with  them  that  these  rates 
need  further  review  and  further  revision,  not  for  the  purpose 
of  lining  them  up  with  the  unreasonable  rates  now  proposed 
from  related  points  in  Central  Freight  Association  territory 
to  zone  one,  but  for  a  re-alignment  of  the  Buffalo-Pittsburgh 
rates  with  relation  to  the  important  fact,  demonstrated  in  this 
record,  and  which  was  not  developed  in  Dockets  10500-10515, 
that  the  Pittsburgh-Buffalo  rates  apply  through  all  Virginia 
gateways,  and  including  the  nearer  gateways  on  the  Virginian 
Railway,  as  well  as  the  western  Virginia  cities  of  Roanoke  and 
Lynchburg,  whereas  the  60  cents  differential  basis  established 
as  a  liberalized  maximum  in  the  former  case  was  based  upon 
an  average  mileage  of  158  miles  south  of  the  gateways  of  Rich- 


5 


66 


mond  and  Norfolk  only.  Quoting  from  pages  1668-1669  of  the 
record,  Mr.  J.  W.  Perrin’s  testimony: 

t / 


“1  want  to  call  attention  to  Exhibit  415,  as  showing  the 
average  miles  to  the  several  zones,  both  in  the  Mississippi  Val¬ 
iev  and  in  North  and  South  Carolina. 

“Q.  (By  Commissioner  Eastman)  :  What  Virginia  cities 
did  you  figure  from? 

“A.  These  average  distances? 

“Q.  Yes,  sir. 

“A.  The  whole  line  of  them,  from  Richmond  and  Norfolk 
across  to  Roanoke. 

“Q.  (By  Mr.  Thurtell)  :  As  to  the  rates  to  South  Carolina, 
Mr.  Perrin,  you  have  put  in  the  rates  to  South  Carolina  from 
Virginia  cities  as  a  group,  using  all  of  the  principal  Virginia 
cities,  have  you  not? 

“A.  Yes,  sir. 

“Q.  (By  Commissioner  Eastman)  :  The  Commission’s  dif¬ 
ferentials  were  based  on  Norfolk  and  Richmond,  were  they 
not  ?  ’  ’ 

“A.  The  Commission’s  differentials,  yes,  sir. 

“Q.  The  differentials  fixed  by  the  Commission  in  Docket 
10500? 

“A.  Yes,  sir.” 


So  we  have  it  clearly  understood  that  the  differential  basis, 
fixed  by  the  Commission  as  maximum  differentials  in  that  case, 

and  which  the  carriers  now  seek  to  increase  because  thev  do 

€/ 

not  line  up  with  their  proposed  rates  from  Central  Freight 

k 

Association  territory,  measured  the  maximum  differentials 
which  the  Commission  decided  should  apply  through  Richmond 
and  Norfolk  to  zone-one  points,  dealing  as  they  were  in  that 
case  principally  with  the  Eastern  trunk-line  adjustment.  It  is 
now  clearly  determined  that  the  Pittsburgh  rates,  as  distin¬ 
guished  from  the  Eastern  trunk-line  adjustment,  make  through 
the  western  Virginia  gateway  as  well  as  Richmond  and  Nor¬ 
folk — that  the  average  haul  south  of  the  gateways  is  substan¬ 
tially  less — but  little  more  than  half,  in  fact,  the  average  haul 
the  Commission  necessarily  had  in  mind  in  fixing  the  60-cents 
differential  which  the  carriers  now  seek  to  increase. 

Here  is  where  the  whole  Central  Freight  Association  zone- 
one  adjustment  hinges.  As  the  Pittsburgh-Carolina  zone-one 


67 


adjustment  now  stands,  it  condemns  the  carriers’  proposed 
adjustment  from  related  Central  Freight  Association  territory. 
If  the  60-cents  differential  basis  from  Pittsburgh  stands,  there 
must  be  a  substantial  revision  of  their  proposed  Central  Freight 
Association  rates. 

We  are  insisting  that  the  present  adjustment  from  Pitts¬ 
burgh  demands  further  revision  on  the  record  now  before  the 
Commission,  because  there  cannot  be  justified  as  high  a  differ¬ 
ential  for  the  average  haul  south  of  all  the  gateways  of  85 
miles  from  Pittsburgh  as  for  the  average  haul  south  of  Rich¬ 
mond  and  Norfolk  of  158  miles  from  Eastern  trunk-line  terri¬ 
tory  on  rates  which  make  only  through  the  Richmond  and  Nor¬ 
folk  gateways.  We  are  insisting  that  the  through  rates  from 
both  Central  Freight  Association  territory  and  Pittsburgh, 
which  makes  alike  through  all  the  Virginia  gateways,  should 
all  be  based  upon  the  same  differential  factor,  and  that  factor 
should  be  substantially  less  than  the  60-cents  basis  from  East- 
ern  trunk-line  territory,  reflecting  the  difference  between  the 
average  haul  south  of  the  gateways  of  85  miles  in  the  one  case 
and  158  miles  in  the  other. 

4th.  Higher  rates  from  Pittsburgh  necessary  to  keep  open 
circuitous  routes  if  proposed  rates  from  points  on  such  circuit¬ 
ous  routes  are  approved. 

By  this  time  it  will  be  seen  that  the  carriers  are  proposing 
to  get  into  Zone  1,  North  Carolina,  from  that  whole  sweep  of 
country — Buffalo-Pittsburg,  Central  Freight  Association  terri¬ 
tory  and  Ohio  River — by  circuitous  routes  through  southeast¬ 
ern  territory  and  come  in  at  the  back  gate,  when  there  are 
direct,  short-line  trunk  lines  through  Virginia  gateways. 

In  discussing  the  Buffalo-Pittsburg  rates  Mr.  Perrin  says 
that  “inasmuch  as  lines  leading  west  from  these  points  com¬ 
pete  for  traffic  to  Carolina  territory,  and  inasmuch  as  the  short¬ 
line  distances  are  in  some  cases  via  the  western  routes,  ’  ’  etc. 

In  making  that  statement,  Mr.  Perrin  must  have  been  con¬ 
sidering  a  few  points  in  extreme  Western  North  (  arolina, 
making  through  the  Carolina,  Clinchfield  and  Ohio.  The 
routes  leading  west  from  Buffalo  and  Pittsburg  are  not  only 
not  the  short-line  route  to  any  point  in  Zone  1  North  (  arolina, 


68 


but  they  are  in  every  case  unreasonably  circuitous  routes.  This 
situation  represents  perhaps  the  extreme  limits  to  which  car¬ 
riers  have  gone  to  bank  up  the  rates  to  North  Carolina  points 
so  as  to  leave  open  unreasonably  circuitous  routes  without 
fourth  section  relief,  and  we  are  illustrating  this  situation  by 
map  on  insert  page,  so  that  it  may  be  more  clearly  visualized. 

By  reference  to  Womble’s  Exhibits,  Nos.  1214  and  1215,  it 
will  be  seen  that  there  are  four  routes  Pittsburg  to  zone  one 
points,  one  that  leads  east  and  three  routes  west  from  Pitts¬ 
burg.  The  actual  and  average  distances  to  all  Virginia  gate¬ 
ways  are  shown  on  Exhibit  No.  1215.  The  most  direct  route 
is  via  Shenandoah  Junction — average  distance  to  all  Virginia 
gateways  469  miles.  The  shortest  of  the  routes  leading  west 
from  Pittsburg  via  Mt.  Pleasant  and  Charleston,  W.  Va.,  aver¬ 
ages  641  miles,  against  the  short  line  of  469  miles,  a  difference 
in  distance  of  172  miles,  or  an  average  circuity  of  36.6  per  cent. 

The  next  shortest  route  leading  west  from  Pittsburg  is 
through  Columbus,  0. ;  average  distance  to  all  Virginia  gate¬ 
ways  705  miles;  difference  in  distance  of  236  miles,  or  average 
circuity  50.3  per  cent. 

The  next  shortest  route  leading  west  from  Pittsburg  is 
through  Cincinnati ;  average  distance  to  all  Virginia  gateways 
859  miles ;  difference  in  distance  of  390  miles,  or  average  cir¬ 
cuity  83.2  per  cent. 

As  the  short  line  to  every  point  in  zone  one  makes  through 
Virginia  gateways,  circuity  in  miles  from  Pittsburg  would 
be  the  same  to  these  zone  one  points  as  to  Virginia  cities. 

All  of  these  unreasonably  circuitous  routes  are  held  open 
under  observance  of  the  fourth  section  under  carriers  ’  pro¬ 
posals,  and  the  even  more  circuitous  route  of  the  Southern  Rail¬ 
way  through  Cincinnati  and  Asheville  is  likewise  held  open — 
Pittsburg  to  zone  one.  The  Asheville  route  of  the  Southern 
from  Cincinnati  to  zone  one  points  averages  86V2  miles  cir¬ 
cuitous,  so  that  its  route  from  Pittsburgh  to  zone  one  would 
average  86Vo  miles  more  circuitous  than  the  great  circuity  of 
the  route  shown  above  from  Pittsburg  to  Virginia  cities  via 
Cincinnati. 


GEOGRAPHICALLY  CORRECT  MAP  INDlCATmr 
LINE  ROUTE  BETWEEN  PITTSBURG  AND 


ZONE  1  POINTS,  COMPARED  WITH 
CINCINNATI 


SHORT  TRUNK 

,  north  Carolina 
circuitous  route  via 


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69 


ZONES  TWO  AND  THREE 

In  every  rate  adjustment  making  through  Virginia  gate¬ 
ways  the  problem  is  the  adjustment  to  zone  one,  which  auto¬ 
matically  fixes  the  adjustment  to  zones  two  and  three  on  the 
same  relationship  over  zone  one  which  obtains  in  adjustment 
of  local  rates  from  Virginia  cities  to  these  zones.  This  is  both 
the  historical  and  logical  relationship.  For  this  reason  we 
have  confined  our  discussion  to  zone  one  rates. 

Only  two  proposals  have  been  made  to  change  this  relation¬ 
ship  :  the  proposal  to  split  zone  one,  which  has  been  discussed, 
and  the  proposal  of  the  carriers  to  apply  the  Ohio  River  ad¬ 
justment  all  the  way  from  Macon,  Georgia,  to  the  Virginia- 
North  Carolina  State  line,  and  from  Augusta,  Georgia,  to  the 
Virginia-North  Carolina  State  line. 

When  this  proposal  falls  down,  and  the  rates  to  zone  one 
are  made  via  the  trunk-line  route,  we  assume  that  the  carriers 
will  be  back  in  agreement  that  whatever  rate  is  made  to  zone 
one  through  Virginia  gateways  will  build  up  by  each  succeed¬ 
ing  zone  from  the  Virginia  gateways,  taking  the  increase  in 
through  rate  over  zone  one  which  the  zone  rate  from  the  gate¬ 
ways  takes  over  zone  one. 

CHARLOTTE,  N.  C. 

Something  specifically  ought  to  be  said  about  Charlotte, 
which  is  in  zone  two,  because  of  the  conflict  between  that  city 
and  Spartanburg,  South  Carolina,  which  has  arisen  from  the 
findings  of  the  Commission  in  the  Spartanburg  case  (34  I.  C. 
C.,  p.  484,  and  59  I.  C.  C.,  p.  346),  and  more  particularly  from 
the  method  used  by  the  carriers  in  complying  with  that  de¬ 
cision. 

The  complaint  in  that  case  was  filed  in  August,  1913,  ten 
years  ago,  and  the  revision  of  rates  under  that  order  was  not 
made  until  1921.  There  was  a  three-cornered  interest  involved 
in  that  adjustment,  but  only  two  of  these  interests  were 
parties— the  complaining  city  of  Spartanburg  and  the  respon¬ 
dent  carriers.  The  complaint  alleged  discrimination  against 


Spartanburg  as  compared  with  Atlanta  and  Charlotte.  Neither 
the  city  of  Charlotte  nor  other  related  North  Carolina  inter¬ 
ests  were  parties  to  or  represented  at  either  hearing  in  that 
case.  When  the  carriers  sought  to  comply  with  the  Commis¬ 
sion’s  findings  in  that  case  by  raising  the  rates  to  Charlotte, 
that  city  did  file  protest  against  the  increased  rates,  but  the 
case  had  been  long  pending  and  the  Commission  declined  to 
suspend  the  rates. 

It  was  then  the  purpose  of  the  city  of  Charlotte  to  file  direct 
complaint  against  the  new  rates,  but  they  were  advised  by  the 
North  Carolina  Corporation  Commission  that  inasmuch  as  a 
general  investigation  of  all  these  southeastern  rates  was  under 
way,  such  complaint,  if  filed,  would  be  consolidated  with  and 
become  a  part  of  this  general  investigation  in  which  these 
rates  are  in  issue. 

Still  another  interest  that  was  not  heard  in  the  original  Spar¬ 
tanburg  case  is  that  of  the  other  cities  in  the  Spartanburg 
group — Abbeville,  Anderson,  Belton,  Calhoun  Falls,  Easley, 
Greenville,  Greenwood,  Greer,  Laurens,  Pelzer,  Seneca,  Simp- 
sonville  and  Clinton.  These  cities  are  presenting  their  inter¬ 
ests  in  this  case  and  insisting  that  the  old  group  basis,  includ¬ 
ing  Spartanburg,  should  be  maintained,  and  that  the  rates  to 
this  group  should  be  based  on  the  route  through  Atlanta,  rather 
than  the  route  through  Asheville,  N.  C.,  or  St.  Paul,  Ya. 

Whenever  the  question  of  rates  to  North  Carolina  points 
through  Virginia  gateways  has  been  presented,  the  question 
has  arisen  as  to  how  far  the  reflection  of  the  Virginia  cities 
rates  should  extend.  Does  not  an  analysis  of  this  compre¬ 
hensive  record,  in  which  all  interests  are  represented,  support 
and  strengthen  the  general  zone  basis  that  has  obtained  for 
thirty-six  years,  and  indicate  that  the  rates  up  to  and  includ¬ 
ing  the  Anderson-Spartanburg-Greenville  group  should  be 
based  on  the  Atlanta  route,  and  that  to  points  north  of  this 
group  the  rates  should  be  based  on  the  Virginia  cities  route? 

Bearing  on  this  particular  point,  the  testimony  of  Mr.  G.  AV. 
Clapp  (pp.  11071-2),  representing  all  of  that  Piedmont  group 
except  Spartanburg,  is  strong : 


71 


‘‘Q.  There  are  two  gateways  from  t lie  west  through  which 
freight  moves  to  these  Piedmont  cities.  Have  you  given  any 
study  to  the  relative  amount  of  the  movement  through  the 
Atlanta  gateway,  the  Asheville  gateway,  and  the  St.  Paul  gate¬ 
way?  I  said  two  gateways,  I  should  have  said  three. 

“A.  I  have  figures  from  the  railroads  showing  the  per¬ 
centage  of  traffic  moving  from  the  Ohio  River  crossings  and 
the  Mississippi  River  crossings  to  points  in  the  Piedmont 
group  from  February  5th  to  10th,  inclusive. 

“Q.  You  got  that  information  from  the  carriers? 

“A.  Yes,  sir. 

“Q.  Have  you  compiled  that  information,  showing  the  per¬ 
centage  moving  through  each  of  the  gateways  to  each  of  the 
cities  you  represent? 

“A.  Yes,  sir. 

“Q.  State  that. 

“  A 


To  Atlanta  Asheville  St.  Paul  Total  P.  C. 

Abbeville  _  98.7  1.3  _  100 

Anderson  _  89.6  .9  9.5  100 

Clinton  _  96.6  1.5  1.9  100 

Greenville  _  81.6  3.1  15.3  100 

Greenwood _  35.4  8.9  55.7  100 

Laurens  _  89.5  2.3  8.2  100 

Spartanburg  _  76.1  13.4  10.5  100 

Piedmont  group _  81.07  4.49  14.44  100 


It  will  be  noted  that  the  heaviest  percentage  moving  to  any 
city  in  the  group  through  the  Asheville  route  is  13.4  per  cent 
to  Spartanburg  and  that  76.1  of  western  freight  to  Spartan¬ 
burg  moves  through  the  Atlanta  route. 

The  record  does  not  disclose  the  movement  of  western  freight 
to  Charlotte.  It  was  in  evidence  in  the  Spartanburg  case  that 
the  Southern  Railway  moved  its  western  freight  to  Charlotte 
through  Statesville  rather  than  Spartanburg,  owing  to  better 
traffic  conditions  over  that  route  than  over  the  Saluda  route 
to  Spartanburg,  and  in  this  case  we  have  the  admission  of  Mr. 
B.  G.  Brown,  assistant  traffic  manager,  Southern  Railway  (pp. 
4806-14),  that  it  would  be  uneconomical  for  the  Carolina  lines 
to  handle  traffic  to  points  in  North  Carolina  through  the  At¬ 
lanta  route  as  against  the  A  irginia  cities  route. 


72 


Does  not  this  line  of  testimony  establish  with  reasonable 
satisfaction  the  boundary  where  the  influence  of  the  Virginia 
cities  route  should  end  and  that  of  the  Atlanta  route  begin? 

At  the  time  of  filing  its  original  complaint  the  city  of  Spar¬ 
tanburg  had  substantial  grounds  for  complaint.  Its  rates  from 
the  north,  east  and  west  were  higher  than  to  Charlotte  by  more 
than  the  difference  in  progression  of  the  local  rates  from 
Virginia  cities  to  Spartanburg  as  against  Charlotte,  and  its 
rates  from  the  north  were  higher  than  to  Atlanta.  Its  rates 
from  New  York  were  ten  cents  higher  than  the  combination 
of  local  rates  on  Virginia  cities,  and  it  was  clearly  entitled  to 
a  substantial  measure  of  relief. 

On  the  broader  record  presented  in  this  case  the  Commis¬ 
sion  may  well  review  some  of  its  former  findings  in  the  Spar¬ 
tanburg  case,  and  the  alternative  basis  upon  which  such  find¬ 
ings  were  at  that  time  permitted  to  be  observed.  The  ques¬ 
tion  of  the  relation  and  influence  of  the  Virginia  cities  routes 
is  presented  in  this  record  more  thoroughly  and  in  broader 
outline  than  it  was  presented  in  the  Spartanburg  case,  where 
the  sole  issue  was  rates  to  Spartanburg. 

The  issue  is  clearly  drawn  in  this  record  as  to  the  extent  to 
which  the  trunk  line  level  of  rates  should  be  reflected  through 
the  Virginia  gateways.  It  is  our  contention  that  this  lower 
rate  level  must  be  given  recognition  up  to  the  point  where 
reasonable  through  rates  made  over  the  trunk  lines,  and  grad¬ 
ing  up  with  the  zones  south  of  the  gateways,  meet  the  level 
of  rates  made  over  southeastern  lines  from  Ohio  River  cross¬ 
ings.  Clearly  enough  this  meeting  point  should  not  be  the 
equi-distant  point  via  the  trunk  line  and  southeastern  routes, 
for  that  would  give  no  reflection  whatever  of  the  lower  trunk 
line  level  of  rates.  The  equi-distant  point  has  been  shown  to 
be  just  north  of  Lexington  and  70  miles  north  of  Charlotte. 
(Womble,  p.  6481.) 

This  record  discloses  more  completely  than  has  ever  been 
developed  in  any  former  proceeding  before  the  Commission 
the  character  of  transportation  lines  over  the  two  routes. 

By  the  trunk  lines  we  have  Norfolk  and  Western  and  Chesa¬ 
peake  and  Ohio  from  Cincinnati  to  Roanoke  and  Lynchburg — 


73 


two  of  the  strongest  trunk  lines.  South  of  Lynchburg  we  have 
what  has  been  shown  by  the  carriers  themselves  to  be  the  best 
piece  of  railroad  in  the  whole  South — better  than  either  of  the 
Virginia  trunk  lines.  This  same  line  extends  to  Spartanburg, 
but  76  miles  beyond  Charlotte,  and  with  somewhat  diminish¬ 
ing  traffic  in  South  Carolina. 

On  the  line  of  the  Southern  through  Asheville  we  have  on 
the  Spartanburg  division,  south  of  Asheville,  what  Mr.  B.  G. 
Brown,  assistant  freight  traffic  manager  of  the  Southern  Rail¬ 
way,  described  as  the  heaviest  grade  on  any  standard  railroad 
in  the  country  that  he  knew  of. 

The  trend  of  the  decisions  of  the  Commission  in  other  cases, 
since  the  Spartanburg  decision,  has  been  strongly  in  the  direc¬ 
tion  of  giving  greater  effect  to  the  Virginia  cities  routes  by 
requiring  through  rates  over  these  gateways  “substantially 
less  than  combination,”  where  formerly  the  influence  of  that 
route  was  limited  by  full  combination  rates — notably  in 
Dockets  10500-10515,  “Rates  to  North  Carolina,”  and  in  the 
Johnson  City,  Tenn.,  case,  where  rates  from  Central  Freight 
Association  territory  and  Pittsburg  were  prescribed  on  a  30 
cents  differential  basis  over  St.  Paul,  Virginia,  and  Bristol, 
Virginia-Tenn. 

Since  the  original  decision  in  the  Spartanburg  case,  the 
whole  “basing  point”  system  in  the  South  has  been  torn  up, 
root  and  branch,  and  the  Commission  and  carriers  become  even 
more  strongly  committed  in  this  case  to  the  general  policy  of 
breaking  through  the  gateways  with  reasonable  through  rates. 

The  whole  trend  is  in  the  direction  of  giving  greater  rather 
than  less  effect  to  the  potentiality  of  the  routes  through  Vir¬ 
ginia  gateways,  and  this  is  especially  and  necessarily  true  of 
rates  from  points  in  Central  Freight  Association  territory 
which  we  have  shown  in  this  record  make  to  and  through  Vir¬ 
ginia  gateways  via  other  routes  than  through  Cincinnati. 

In  the  Spartanburg  case  the  Commission  was  dealing  with 
one  complaining  city,  and  one  having  much  merit  in  its  gen¬ 
eral  complaint;  and,  as  before  stated,  the  Commission  did  not 
have  in  its  record  even  the  benefit  of  representation  of  other 
interested  sections.  In  this  case  the  Commission  has  the  re- 


6 


74 


sponsibility  of  prescribing*  a  harmonious  adjustment  for  the 
whole  territory,  with  every  interest  represented  and  a  com¬ 
plete  and  comprehensive  record. 

CONCLUSION 

We  have  undertaken  in  brief  outline  to  cover  the  high  points 
in  the  voluminous  record  of  testimony  and  exhibits  relating* 
to  the  proposed  Carolina  adjustment.  We  have  endeavored  to 
treat  the  considerations  that  really  have  important  bearing  on 
these  adjustments.  They  have  been  discussed  under  restraint. 
We  have  endeavored  to  treat  the  carriers’  proposals  with  the 
respectful  consideration  which  the  importance  of  the  matter 
demands.  This  has  been  extremely  difficult  to  do  when,  as 
must  now  be  apparent,  every  rate  the  carriers  have  proposed 
from  that  whole  sweep  of  country — Ohio  River,  around  through 
Central  Freight  Association  to  and  including  Buffalo-Pitts- 
burg — has  been  made  upon  the  southeastern  rate  level  and  pro¬ 
posed  and  designed  to  meet  the  convenience  of  southeastern 
lines,  operating  unreasonably  circuitous  routes  through  south¬ 
eastern  territory,  and  represents  a  denial  of  the  level  of 
through  rates  that  should  and  must  apply  over  the  direct  lines, 
operating  in  trunk  line  territory,  to  within  an  average  distance 
of  85  miles  of  the  51  cities  and  towns  in  North  Carolina  zone 
one. 

Every  rate  they  have  proposed,  without  exception,  in  all  of 
these  North  Carolina  adjustments,  should  be  discarded.  They 
are  all  of  them  built  upon  a  false  foundation,  and  when  the 
foundation  is  uneven  or  out  of  square,  the  whole  superstruc¬ 
ture  is  out  of  line.  Even  from  Pittsburg*  and  Cleveland  they 
are  “looking  at  North  Carolina  through  Ohio  River  crossings.” 

We  say  again,  as  we  began,  we  seek  no  special  advantage. 
We  do  insist  that  upon  any  standard  of  equity  we  are  entitled 
to  through  rates  made  over  the  direct  trunk  lines — on  the  level 
of  rates  employed  by  these  trunk  lines— upon  reasonable  dif¬ 
ferentials  over  the  Virginia  gateways,  and  related  to  the  traf¬ 
fic  conditions  on  the  lines  south  of  the  gateways;  and  that, 
when  rates  from  the  Virginia  gateways  make  through  our  ter¬ 
ritory,  we  are  entitled  to  rates  reasonable  differentials  under 
the  rates  from  these  gateways. 


75 


The  North  Carolina  rate  structure  cannot  be  “  looked  upon 
as  the  balance  of  the  southeast,  through  Ohio  River  crossings.” 
It  differs  in  every  material  aspect  and  relation  from  that  to 
“the  balance  of  the  southeast.” 

“The  balance  of  the  southeast”  has  its  own  direct  routes 
over  different  lines,  and  on  different  rate  levels. 

“The  balance  of  the  southeast”  does  not  live  alongside  of 
the  numerous  Virginia  gateways  having  trunk-line  rates,  and 
therefore  having  to  meet,  within  their  own  territory,  the  com¬ 
petition  of  trunk-line  competitors. 

“The  balance  of  the  southeast,”  generously  and  justly,  is 
not  contending  that  our  rates  should  be  constructed  over  their 
routes  and  upon  their  levels. 

Every  southeastern  witness  representing  shipping  interests, 
who  has  discussed  the  Carolina  situation  in  this  proceeding, 
has  conceded  the  distinguishing  factors  in  our  rate  situation. 

A  fundamental  principle  is  involved  in  making  the  rates  to 
North  Carolina  from  Central  Freight  Association  territory, 
Ohio  River  crossings  and  Buffalo-Pittsburg  groups. 

We  have  endeavored  to  emphasize  that  principle.  The  con¬ 
siderations  that  must  be  given  controlling  weight  in  fixing  the 
North  Carolina  rates  differ  materially  from  those  that  apply 
to  the  Southeast  generally.  This,  as  we  have  pointed  out,  is 
conceded  by  the  representatives  of  the  Southeast. 

We  refrain  from  discussion  of  matters  that  are  not  of  direct 
and  major  importance  to  the  North  Carolina  interests,  because 
they  will  be  discussed  by  others,  and  we  do  not  wish  to  be¬ 
cloud  the  vital  principle  for  which  we  contend  and  which  must 
be  recognized  and  adopted  if  North  Carolina  interests  are  to 
be  permitted  to  compete  on  fair  grounds  with  their  competitors 
across  the  North  Carolina-Virginia  State  line. 

NORTH  CAROLINA  CORPORATION  COMMISSION. 

W.  T.  LEE,  Chairman, 
GEORGE  P.  PELL, 

A.  J.  MAXWELL, 

EDGAR  E.  CLARK,  Commissioners. 

Counsel. 


« 


Photomount 

Pamphlet 

Binder 

Gaylord  Bros.  Inc. 
Makers 

Syracuse,  N.  V. 

PAT.  JAN  21,  1908 


